The Heads of Agreement (HoA) is often rushed, overlooked, or treated like a formality. But this “preliminary” document can be the very thing that makes or breaks your deal. At Growth Focus, we’ve seen firsthand how costly a vague or poorly constructed HoA can be. It’s not just about documenting intent—it’s about ensuring both sides actually understand each other. That means plain language, no guesswork, and nothing left open to interpretation. Done right, the HoA should give everyone the confidence to move forward. Done poorly, it leads to confusion, disputes, and expensive delays.

The Real Role of the Heads of Agreement

The HoA is the alignment tool. It sets out the commercial terms, establishes who’s responsible for what, and makes it clear what’s binding and what’s not.

More importantly, it surfaces assumptions—before the lawyers, accountants, and due diligence teams get involved. It’s not the warm-up act. It’s the foundation.

Rushing this step or glossing over terms might save time upfront, but it almost always costs more later.

Case Study: The Deal That Never Was

A buyer and seller came together enthusiastically, shook hands over lunch, and quickly knocked out a “basic” HoA to keep things moving.

Three months later, the deal had completely unraveled.

• The retention formula was not clearly understood by both parties.
• The buyer misunderstood certain elements of the transaction, interpreting them their own way and assuming both parties were clearly aligned.
• Due diligence revealed unexpected liabilities the seller thought had been “understood.”
• Misunderstandings escalated.
• Lawyers got involved—negotiating. In Latin.
• The deal? Dead.
• Both parties? Drained.
• Outcome? No sale. No trust. Big bills.

It was completely avoidable. A well-constructed HoA would have aligned expectations from the start.

The Game-Changer: Deal Breaker Clauses

One of the most effective additions we’ve made to our HoAs in recent years is a clause designed to identify potential deal-breakers before due diligence begins.

This clause helps both parties be transparent upfront—eliminating surprises that could derail the transaction later. It’s been instrumental in helping our clients avoid wasted time, emotional fatigue, and legal back-and-forth.

📝 If you’d like a copy of the clause we use to manage this, contact us at Growth Focus.

5 Signs Your Heads of Agreement Is Built for Success

1. Clarity on key commercial terms
   Everyone is aligned, and there’s no ambiguity.
2. Lawyers execute—don’t negotiate
   The core deal is already agreed upon. Legal work is just documentation.
3. No due diligence surprises
   Potential issues have already been flagged and discussed.
4. What’s binding is clearly marked
   Confidentiality, exclusivity, timelines—no confusion.
5. It keeps momentum
   No deal fatigue. No rehashing. Just progress.

5 Red Flags You’re Headed for a Train Wreck

1. Key terms aren’t clearly defined
   If there’s room for interpretation, there’s room for conflict.
2. Assumptions differ between parties
   If you haven’t tested mutual understanding, don’t move forward.
3. Terms like earnouts or retention are skimmed over
   These are critical. They require structure, not guesses.
4. Timelines are vague or missing
   Clarity on next steps and responsibilities matters.
5. No discussion of deal breakers
   If no one’s raised them, they’ll likely emerge later—and derail everything.

Our Approach at Growth Focus

Our goal is to make the Heads of Agreement do the job it’s supposed to do—protect both parties and keep the deal on track. Here’s how we do it:

• Plain-language documentation – No Latin, no jargon, just clarity.
• Tested alignment – We check that both sides truly understand and agree on every key point.
• Strategic inclusions – Like our deal-breaker clause to catch problems early.
• Clear timelines and responsibilities – Everyone knows what’s next.
• Legal-ready handoff – So lawyers can execute, not re-open negotiations.

Final Thought: If It’s Not Clear, You’re Not Ready

The Heads of Agreement is the first serious step in your transaction. If it’s rushed or unclear, you’re not just risking delay—you’re risking the entire deal.

Take the time. Get it right. Avoid the disaster handshake that starts with optimism and ends with frustration.

Want to See What a Well-Structured HoA Looks Like?

If you’re preparing for a sale, merger, or acquisition and want to make sure your deal doesn’t go off the rails:

Contact Growth Focus today.

Ask us about the key clause we use to prevent deal-killing surprises—and how we help ensure smoother, faster transactions.

👉 Visit Growth Focus to speak with our team.