However, it possible to include commitments in the heads of terms which require the withdrawing party to cover the costs of the other party if they have withdrawn without good cause. You will appreciate that the purchaser will want to withdraw if, having carried out due diligence, he finds unexpected information about the business.

The transfer of a business as a going concern will not usually be regarded as a taxable supply of goods or of services for the purposes of value added tax.  However, for this exemption to apply, it is essential that the business or part of it is transferred as a going concern and that the assets are to be used by the purchaser in carrying on the same kind of business as that carried on by the seller.  If the sale relates to part only of a business, it must be a part which can be operated on its own.  There must be no break in trade.  Furthermore the purchaser must already be a registered person for VAT purposes or someone who will be immediately registerable as a result of the transfer.

However, you need to ensure that the purchaser cannot walk away from the deal and use the information you have provided for their own benefit. You can therefore enter into a “confidentiality agreement” or “non-disclosure” agreement with the purchaser. These documents contain details of what information will be regarded as “confidential” and to whom it can be disclosed (for instance, professional advisors). They will also deal with what happens if the purchaser breaches your confidentiality.

• the seller will provide information requested by the 'information seeking' warranties;
• the seller will seek to impute certain knowledge (particularly matters of public record)to the purchaser; and
• the seller will disclose specific information which might render one or more warranties untrue, again on the basis that the purchaser has agreed to proceed with the transaction despite having that knowledge and cannot therefore subsequently claim compensation under the warranties relying on that information.

By accepting a deferred payment, you are at risk of the purchaser becoming insolvent during the interim period. It is therefore common for the overall price to be increased when the payment is deferred (or for interest to be paid on the deferred element until payment is received). 

Before agreeing to accept a deferred payment, you should ensure that you have carried out your own checks on the financial standing of the purchaser. You should also seek suitable security from the purchaser. This can include personal guarantees, legal charges over property, etc.

They are the starting point for the deal and will enable your legal advisors to prepare drafting the sale documentation.

• to reserve the right to recover damages for breach of warranty;
• to require the disclosure of information; and 
• to 'force' the seller into disclosing full and accurate details of particular matters.

The warranties are in effect promises by the seller about the state of the business. For instance, the seller might warrant that the business is not in dispute with any employees. If that warranty proved to be untrue, the purchaser would have a financial claim against the seller.

The purchaser may want you to trim down your workforce before the sale takes place. If any employee who is dismissed ‘for a reason connected with the sale’ is deemed to have been unfairly dismissed, they may have a claim against the business for compensation. If this is not done for the right reasons and following the right procedures, this could lead to a claim for unfair dismissal against you. It is vital that you take professional employment law advice before you dismiss any employees or alter their terms and conditions in these circumstances.

As with any deferred payment, there is a risk of non payment. Moreover, if the business underperforms after completion, you may not receive any further payments. For this reason, it is common for the seller to continue running the business (or part of it) as part of any earn out arrangement. This will provide the seller with an element of control in anticipation that they can achieve the earn out targets.

Ordinarily, this will involve the seller providing replies to detailed written enquiries. The enquiries will cover a number of issues, ranging from employee information to disputes with customers. It is important that the information is provided at an early stage so as to avoid a delay in the sale.