How a Sale Process Actually Runs Before Heads of Terms

Owners tend to picture a sale as a negotiation with a buyer. In practice the negotiation comes last, and the months before it decide how much room there is to negotiate at all.

The period between deciding to sell and signing Heads of Terms follows a recognisable sequence. Knowing what each stage is for, and what the seller controls at each one, makes the whole thing far less opaque.

Preparation and the Anonymous Teaser

Before anyone is approached, the business needs a clear equity story, numbers that reconcile, and a normalised view of earnings a buyer will accept. This stage takes weeks or months, and skipping it shows up later as questions the seller cannot answer.

The first document to leave the building is a teaser: a page or two on the business, its market and its financial profile, without naming it. It goes to a list the owner has approved, and its only job is to generate enough interest to justify signing a confidentiality agreement.

What Each Buyer Sees, and When

Information goes out in layers. The teaser is anonymous. The company name and the information memorandum follow a signed confidentiality agreement. Detailed trading data, customer contracts and employee information come later, and the most sensitive material waits until a buyer has been chosen.

That sequence is not administration for its own sake. Information is what a seller pays with, and each release should buy something back. A buyer asking for your customer list before it has put a number on the table is asking you to pay before it has bid.

Staging also keeps the field open. Release everything at once and the quickest buyer has what it needs to decide while the others are still reading the teaser. Feeding the detail out in rounds keeps several buyers moving at roughly the same pace, and that is what makes the later stages competitive.

The Information Memorandum and First-Round Offers

The information memorandum is the full picture: history, market, operations, management, customers, financial performance and the growth case. Buyers who have signed an NDA receive it, and are then asked for indicative offers by a stated date.

Those first offers are non-binding, and they are meant to be. Their purpose is to establish which buyers are serious, how each of them values the business, and what assumptions sit behind their numbers. What they are not is a price the seller can hold anyone to.

The value of putting a proper information pack in front of buyers is easiest to see when it is absent. After Elliott Advisors' approach to Currys became public in February 2024, Currys' board disclosed on 19 February that it had rejected a proposal at 62 pence a share. The board's stated conclusion was that the proposal undervalued the company and its prospects. Elliott withdrew on 11 March 2024, stating that "it is not in an informed position to make an improved offer for Currys on the basis of the public information available to it". A buyer working from the outside prices in its own uncertainty. Controlled disclosure to a serious bidder is how a seller removes that discount.

Management Meetings and Second-Round Bids

Shortlisted buyers then meet management. These meetings carry more weight than owners expect, because the buyer is deciding whether it believes the plan and whether it can work with the people presenting it.

Buyers are then given access to more detail and asked to revise their offers. Second-round bids are where the real differences appear, in price but also in structure, funding certainty, and what the buyer expects the owner to do after completion.

Selection, Negotiation and Exclusivity

The seller then chooses, and price is only one input. Deliverability, funding, the buyer's diligence requirements and their intentions for the business all bear on which offer is genuinely the best one.

Rejecting an offer is a normal part of this stage rather than a breakdown of it. Britvic's directors rejected an unsolicited proposal from Carlsberg at 1,200 pence a share received on 6 June 2024, then rejected a revised proposal at 1,250 pence made on 11 June 2024. The recommended deal announced on 8 July 2024 was struck at 1,290 pence a share plus a special dividend of 25 pence, giving combined consideration of 1,315 pence. In that instance, treating the opening number as an opening number was worth 115 pence a share.

Only once terms are agreed does the seller grant exclusivity and sign Heads of Terms. Exclusivity is real leverage handed across the table, so it should be time-limited and given only when the seller is satisfied the deal is deliverable.

Summary

The months before Heads of Terms run from preparation and an anonymous teaser, through NDAs and the information memorandum, to indicative offers, management meetings and revised bids, and finally to selection and exclusivity. Nearly all of a seller's leverage is built in that sequence, as the Currys and Britvic examples show from opposite directions.

At La Salle, we run this stage ourselves rather than delegating it, because it is where the outcome is largely settled. Getting the preparation, the buyer list and the information right is what turns the negotiation at the end into a short conversation instead of a long one.

If you have questions regarding any stage of the sales process, reach out in confidence and we'll be happy to talk you through the process.