Legal Glossary

Memorandum of Understanding

MOU. Also known as heads of terms, heads of agreement, term sheet, or letter of intent. A document setting out the terms agreed in principle between the parties. A MOU evidences the parties’ intentions and is usually legally binding.


Two companies are combined into a single company. Companies laws and regulations will prescribe various methods but the most common process is where the buyer creates a new wholly-owned subsidiary that will merge directly with the target company.