A Playbook For Start-up Exits: Model Heads Of Terms For UK M&A Transactions

Written by Henry Humphreys, Managing Partner at Humphreys Law

Founders can spend years getting their cap table playbook right, but when it’s time to structure a sale, they are often met with a blank page.  No standard terms.  No model documents. Just the buyer’s last deal and their legal team’s idea of ‘market’.

Nobody much likes flying blind and – in the absence of any widespread availability of model heads of terms for M&A – we at Humphreys Law have launched Project Hedz.

There Are Standard VC Financing Terms

Late stage founders who have steered their companies through the funding rounds will be very familiar with VC investment documents, the BVCA model terms, and so on.  By series B+, many will have a highly-sophisticated understanding of how and why venture capital deals are structured as they are.  

In the UK, the US (which has the NVCA model documents) and other major jurisdictions there are very well-worn paths to documenting VC investments.  There is there a good understanding socialised amongst advisors and the market generally as to what is boilerplate and rarely needing to be negotiated and where the real points of leverage and discussion are.

All of that is a good thing for getting deals done quickly and on sensible terms.

No Standard Approach or Terms When It Comes To Exit

But, when it comes to exit, founders are often surprised to discover that there is no standardisation of terms at all.  

Are there model documents to turn to?  No.  Is there a common consensus of how to structure tech exits and what the market standard terms are?  Definitely not.  Is the buyer just taking the documents and approach from the last deal it did and looking to impose that on the sellers?  Perhaps.

Many deals abort before completion as a result.  Some deals are signed anyway but on terms that one day the parties wish they’d had more time and information to negotiate away from.

Project Hedz

That is why we have launched ‘Project Hedz’ in October.  What we have done is make some basic assumptions about what mid-market, mid-stage, tech exits usually look like –

• share sales (i.e. sales of the Target company’s entire issued share capital) rather than asset sales (i.e. sales by that company of all or some of its business with each asset individually transferred across);
• a UK-incorporated Target company;
• ‘locked box’ deals – which are fixed price and more simple – rather than ‘completion accounts’ deals with a post completion true up of working capital; 
• a buyer from ‘trade’ rather than private equity, the later typically having their own standard approach and heads of terms;
• a split exchange and completion to legislate for obtaining the consent of a regulatory, competition or tax authority (or other conditionality), as is often the case; and
• otherwise want to keep the drafting in the heads as simple as possible, with the drafting of detailed mechanics to be kept for the long form,

and then drafted up model heads of terms with accompanying drafting notes.

Why Is This A Good Thing For UK Tech?

M&A is famously laborious as a process and fraught with risk on both buy side and sell side.  Not having a basic starting point for setting out the key terms does not help.  So Project Hedz is a step forward from that perspective.

Allowing buyers and sellers to spend more time on the key commercial points and less on the boilerplate has to be a good thing.  And speeding up M&A must be a step forward generally because it’s the function by which liquidity happens and gains are made, by which taxes are paid into the UK plc coffers, and by which capital is recycled into the industry to spawn the next generation of start-ups.  

And it’s the market for exits that powers the whole VC industry – without it, founders would not bother to start companies and investors would not risk their own capital to invest in them, and there would be no capital to recycle.

Capital Is Moving Faster Than Ever And The UK Has To Keep Up

It’s a good time to have published Hedz because, in contrast to the market for venture capital investments, M&A has been active as a market – Carta for instance in recent days have reported record numbers of start-ups on their platform as having been acquired in Q3 2025.

The UK needs a strong market for tech exits and a playbook for executing them.  Maybe Hedz is it.  We think it is and will periodically be updating the draft in line with what we see as market practice and feedback from the industry generally.