24/7 Chat Support
Got a question or concern? We’re just a message away and happy to help, completely free!
Frequently asked Questions
In the context of venture capital investments, mergers and acquisitions, and other intricate business transactions, a term sheet is used to list the essential terms and conditions of a proposed business agreement or transaction.
No, a term sheet does not constitute a binding contract. It functions as an initial document that lists the main terms and conditions of a proposed agreement; nevertheless, it does not legally bind the parties to carry out the transaction.
Information on the investment amount, timeframe, rights and obligations of the parties, board representation, voting rights, liquidation preference, dividend policy, anti-dilution clauses, warrants, and exit plan should all be included in a term sheet. The nature of the transaction will determine the precise information contained in a term sheet.
The intricacy of the transaction and the number of parties involved will determine how long it takes to prepare a term sheet. The term sheet's finalization could take a few days or many weeks.
The investment bank, legal firm, or other expert participating in the transaction usually drafts the term sheet. The parties and the specifics of the transaction will determine who is responsible for what when it comes to creating the term sheet.
