The HoTs is a document drawn up by the seller’s solicitor or broker once an offer has been accepted for the business. It details the business’ profile, strengths, financial information, premises details, employees, reasons for the sale, key opportunities etc.

The purpose of a HoTs is to show that the seller is willing to sell and the buyer is willing to buy at an agreed price, subject to a number of important terms and conditions. No money usually changes hands but, notwithstanding that, it is a very useful and important document. It usually gives the buyer exclusive access to the seller’s business for a fixed period of time. This is because a buyer will be reluctant to part with any money at all until a “due diligence” investigation of the business has been carried out. Equally, a seller will be reluctant to part with any sensitive information about the business, unless there is a guarantee that it will be handled in strict secrecy buy the buyer. For this purpose, the HoTs is normally accompanied by a “Non-Disclosure Agreement” (NDA).

Signature of the HoTs shows that both seller and buyer are serious in their intentions. It means that some provisions of the HoTs will be legally binding on the parties.