Raith Rovers manager Ray McKinnon has held talks with Dundee United chairman Stephen Thompson regarding the vacant managerial position at Tannadice.
McKinnon is now understood to be speaking to his backroom staff at Rovers and the Kirkcaldy club's board to keep them informed of developments.
The clubs agreed a financial settlement to allow McKinnon to speak to United.
"We are doing all we feasibly can to retain his services," Rovers chief executive Eric Drysdale said on Sunday.
"However, we understand that Ray wants to listen to what Dundee United have to say and we have agreed to allow this."
Raith's directors, who held several meetings with McKinnon between Thursday and Sunday, have reached an agreement for compensation should the 45-year-old, who had two spells at Tannadice as a player, accept United's offer.
United want McKinnon to succeed Mixu Paatelainen, who was sacked last week following their relegation from the Scottish Premiership.
Dundee-born McKinnon took over at Starks Park last May, having previously managed Brechin City, and guided Rovers to the play-offs for the top flight, where they lost 2-1 on aggregate to Hibs on Saturday.
He started his managerial career with junior club Lochee United after a playing career in midfield that began at Tannadice.
He also played for Nottingham Forest, Aberdeen, Luton Town, Livingston, Raith rovers, Portadown, Stirling Albion, East Fife, Torquay United, Montrose, Lochee and Broughty Athletic.
United job 'a tremendous opportunity'
Current caretaker boss Gordon Young, who said it "would be great to be involved" in the club's future plans, believes a "tremendous opportunity" awaits McKinnon if he decides to take the Tannadice job.
"The plan was for a rebuilding exercise and it is going to be on an even larger scale than was planned," Young said ahead of their final home game of the season against Partick Thistle on Tuesday.
"It would be a tremendous opportunity for somebody to start at the bottom and carve a new future.
"There is an opportunity to develop a new philosophy, a new pathway for the club. It is a big challenge, but life is about big challenges.
"I would like to be part of it because when I came here, it was always about that rebuilding job."
Paatelainen 'will be back' - Young
Young believes any club looking for a new manager would benefit from the experience of the departed Paatelainen, who also previously managed Hibs and Kilmarnock.
"He will be back in the game with his experience and his knowledge," Young added.
"He said to me last week he wasn't prepared to take a break. He had pre-season planned, but he is an intense worker.
"He's very organised and very disciplined and he's a coach that spends a lot of time on attention to detail.
"I firmly believe that, if you have been there before, you understand the situation, so somebody that's been in that division, that knows how to put out a team in a challenging position, I think would be advantageous."