Drafting and negotiating preliminary documents in private equity buyout transactions
Drafting and negotiating preliminary documents in private equity buyout transactions

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Drafting and negotiating preliminary documents in private equity buyout transactions
  • Heads of terms—acquisition
  • Heads of terms—equity
  • Exclusivity
  • Confidentiality

This Practice Note is part of the Lexis®PSL Corporate private equity buyout transaction toolkit.

Once the parties have agreed the broad terms of a commercial deal, including the structure of the private equity buyout (MBO) transaction, there are certain preliminary documents that may be entered into at the outset before due diligence commences and the main documentation is negotiated.

Heads of terms—acquisition

Drafting: finding a suitable precedent

Precedent Comments
Heads of terms-private M&A-share purchase Heads of terms are not usually legally binding on the parties (since they will be construed as an 'agreement to agree') but are often used in share purchase transactions (both in the context of a private equity buyout transaction or otherwise) to record broadly agreed principal deal terms before due diligence is conducted and the share purchase agreement is negotiated.
Heads of terms—private M&A—share purchase—cross-border This Precedent is for use in the context of a cross-border share purchase transaction where the target company is incorporated outside the United Kingdom.

Negotiation: the key terms to include

All parties will be concerned to ensure that the heads of terms include:

  1. a statement of the non-binding