Definition
A term sheet is a non-binding document that outlines the basic terms and conditions of an investment or business agreement. It serves as a preliminary agreement before formal contracts are drafted and signed.
Related Services
M&A advisory, legal services, and venture capital consulting frequently involve term sheet creation and negotiation, helping parties establish clear expectations before proceeding with a deal.
Problem and Application
Term sheets are often used in mergers, acquisitions, investments, and partnerships, but misunderstanding or miscommunication of terms can lead to disagreements or failed negotiations. Clear and precise drafting is essential to avoid conflicts.
Conclusion
A well-drafted term sheet provides a roadmap for formal agreements and helps mitigate risks by ensuring that both parties agree on key terms before committing to a deal.
