Term Sheet
A Term Sheet is a document that ...
- See: Non-Binding, Bullet-Point, Materiality (Law), Mergers And Acquisitions, Legal Counsel, Letter of Intent.
References
2022
- (Wikipedia, 2022) ⇒ https://en.wikipedia.org/wiki/term_sheet Retrieved:2022-11-21.
- A term sheet is a bullet-point document outlining the material terms and conditions of a potential business agreement, establishing the basis for future negotiations between a seller and buyer. It is usually the first documented evidence of a possible acquisition. It may be either binding or non-binding.
After a term sheet has been "executed", it guides legal counsel in the preparation of a proposed "definitive agreement". It then guides, but is not necessarily binding, as the signatories negotiate, usually with legal counsel, the final terms of their agreement.
Term sheets are very similar to “letters of intent” (LOI) in that they are both preliminary, mostly non-binding documents meant to record two or more parties' intentions to enter into a future agreement based on specified (but incomplete or preliminary) terms. The difference between the two is slight and mostly a matter of style: an LOI is typically written in letter form and focuses on the parties' intentions; a term sheet skips most of the formalities and lists deal terms in bullet-point or similar format. There is an implication that an LOI only refers to the final form. A term sheet may be a proposal, not an agreed-to document.
- A term sheet is a bullet-point document outlining the material terms and conditions of a potential business agreement, establishing the basis for future negotiations between a seller and buyer. It is usually the first documented evidence of a possible acquisition. It may be either binding or non-binding.
2021
- https://www.investopedia.com/terms/t/termsheet.asp
- QUOTE: ... A term sheet is a nonbinding agreement that shows the basic terms and conditions of an investment. The term sheet serves as a template and basis for more detailed, legally binding documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is drawn up.
- Key Takeaways
- A term sheet is a nonbinding agreement outlining the basic terms and conditions under which an investment will be made.
- Term sheets are most often associated with start-ups. Entrepreneurs find that this document is crucial to attracting investors, such as venture capitalists (VC) with capital to fund enterprises.
- The company valuation, investment amount, percentage stake, voting rights, liquidation preference, anti-dilutive provisions, and investor commitment are some items that should be spelled out in the term sheet.
- Term sheets are also used for mergers, acquisitions, and long-term debt (i.e. commercial real estate development).
- Term sheets are non-binding, though may often require an upfront good faith deposit or other indicator of evidence that both parties intend to carry out an executed full agreement.