Strictly private and confidential

To: [Insert potential seller name]

[Insert potential seller address]

FAO: [insert name of relevant contact at the seller]

Date: [insert date]

Subject to contract

Heads of terms (also known as an offer letter, term sheet, letter of intent or memorandum of understanding) set out, in a short document, a broad outline of the parties' expectations, understanding and agreement of the key terms of the proposed transaction which they have agreed in principle. Where used, heads will be signed at the beginning of the transaction as soon as the parties agree key terms and before the buyer incurs costs in conducting its due diligence and negotiating the transaction documents. Whilst the heads will not compel the parties to conclude the transaction on the stated terms, or even at all, they are intended to establish, in principle, the main commercial terms of a deal.

There is no standard format for heads of terms and they can either take the form of a letter (as is common) or an agreement. Either party can prepare the heads of terms, although