So a quick non-binding Heads of Terms is a very effective way of getting the Seller into the processes quickly and off the market. The Heads of Terms is generally just a DocuSign document for both parties. Once this is signed, the next phase begins, which is covered in the next chapter. Just to acknowledge that there is another view that there is a significant amount of work that will go into due diligence and legals and if the Seller decides to stop the transaction just for their own reasons, they should reimburse the Buyer their costs. There is good merit in this approach in many cases and most private equity firms include abortive clauses with their Letter of Intent (LOI) which serves the same purpose as a Heads of Terms. This approach makes a lot of sense in many situations, we have just found it can take longer and can lower the chance of getting a Buyer into the next phase as it forces detailed negotiation on price when data points have not been firmly established and trust has not yet been built through a process. The Role of Transworld M&A in the Heads of Terms Phase - As we have mentioned, this is a companion book for our clients so it is assumed that Transworld M&A is managing all of the items in this chapter. The above is very much an overview and it would be almost impossible to put all the different nuances and variations that come up in constructing an offer and getting a transaction past the Heads of Terms phase. Fortunately, we have the experience to manage this and can deal with (as well as have seen) most things that can come along. Also, at this stage, if we have done our job well, the Seller will start to see us as a trusted advisor/3rd party so we are able to have an independent dialogue with them to make sure they stay on track.
81
Made with FlippingBook - professional solution for displaying marketing and sales documents online