After Heads of Terms, What Next? A Step-by-Step Business Sale Timeline

Signing Heads of Terms marks a key turning point in a business sale. It confirms intent, outlines the deal structure, and often triggers an exclusivity period. However, many founders are left asking the same question - after Heads of Terms are signed, what next?

In this post, we walk through the typical deal process timeline in the UK so you know what to expect and how to stay one step ahead.

Step 1: Kick-Off and Legal Instruction

Once Heads of Terms are signed, both sides instruct legal and financial advisers to begin the detailed work. A kick-off call is usually arranged to align on roles, timelines, and key priorities.

If exclusivity has been agreed, it typically starts at this point. The seller agrees not to engage with other buyers during this period.

Step 2: Financial and Legal Due Diligence

The buyer begins formal due diligence, reviewing financial, legal, tax, and operational aspects of the business. This stage can take several weeks and requires frequent communication between advisers.

Key focus areas:

• Revenue, margins, and financial history

• Contracts, employees, leases, and liabilities

• Risks such as litigation or regulatory exposure

Prompt responses and well-organised documentation help maintain deal momentum.

Step 3: Drafting the Legal Agreements

The buyer’s solicitors prepare the draft Share Purchase Agreement (SPA), along with any other documents such as consultancy agreements or loan notes.

This stage includes negotiation of key commercial points, such as:

• The final price and how it will be paid

• Any earn-out or deferred consideration

• Completion mechanism (completion accounts or locked box)

• Warranties, indemnities, and restrictive covenants

• Seller responsibilities post-completion

Legal teams will liaise closely with financial advisers to ensure the agreed terms are reflected accurately.#

Step 4: Completion Accounts or Locked Box Mechanism

If the deal uses completion accounts, the final price is adjusted after completion based on working capital and debt. If it uses a locked box, the price is fixed in advance based on a prior balance sheet.

Clarity in the Heads of Terms about which mechanism will be used helps prevent unnecessary negotiation later.

Explore more: Completion Accounts vs Locked Box

Step 5: Disclosure Process

The seller will prepare a Disclosure Letter, setting out facts that qualify or explain the warranties given in the SPA. This is a crucial step that helps limit post-completion liability.

It is essential to be thorough and well advised during this process.

Step 6: Satisfying Conditions and Final Preparations

Before the deal can complete, various conditions may need to be met:

• Buyer financing or internal approvals

• Landlord or customer consents

• Final diligence queries or document revisions

Once all conditions are satisfied, both parties agree a formal completion date.

Step 7: Signing and Completion

The SPA and all supporting documents are signed, usually electronically, and funds are transferred.

At this point:

• Ownership transfers to the buyer

• The seller either steps back or transitions into a new role (if agreed)

• Any post-completion arrangements, such as earn-out reporting, begin

After Heads of Terms, What Next? Why Understanding the Process Matters

If you are wondering what happens after Heads of Terms are signed, the answer is a structured legal and financial process that can take several weeks or more.

Understanding the deal process timeline helps sellers avoid delays, protect value, and maintain control.

If you want experienced support at this stage, from reviewing Heads of Terms to advising on completion mechanics, we offer fixed-fee services tailored to founders.