Term Sheet

A term sheet is a non-binding document that outlines the key terms and conditions of a proposed business transaction, such as an investment or acquisition. It serves as a preliminary agreement between the parties involved and provides a framework for further negotiations and the preparation of final legal documents.

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In a term sheet, important details related to the transaction are typically included, such as the proposed purchase price, payment terms, key dates and deadlines, conditions precedent, representations and warranties, and any special provisions or agreements specific to the deal. It helps to establish a common understanding between the parties and acts as a guide for the subsequent legal documentation and due diligence process.

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While a term sheet is not legally binding, it plays a crucial role in the negotiation and structuring of a deal. It allows the parties to discuss and agree upon the essential terms upfront, facilitating transparency and efficiency in the transaction process. Once the parties reach a mutual understanding on the terms outlined in the term sheet, they can proceed to draft and execute legally binding agreements, such as a definitive purchase agreement or investment agreement.

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The purpose of a term sheet is to provide an overview of the proposed transaction, highlight the key points of agreement, and set the stage for further discussions and formal agreements. It helps to streamline the negotiation process, minimise misunderstandings, and provide a starting point for the more detailed legal documentation that will follow.