Term Sheets Explained (with 3 examples)

A term sheet is a document that details the material terms and conditions of a business transaction or agreement, usually in bullet-point format. It is important to note that a term sheet is not an agreement in and of itself, may not be binding, and yet is usually unenforceable. Term sheets serve in part a as a guide for legal counsel as they move toward a final agreement. Term sheets are similar to yet distinct from Letters of Intent, which are usually in a letter format versus a bullet point list; both serve as a preliminary record of a proposed business transaction.

The most common area of business wherein one needs term sheets is in the arena of venture capital financing (such investments often begin with circulating a term sheet) and startup companies. In this context, term sheets will usually include the following information:

(a) amount raised,

(b) price per share,

(c) pre-money valuation,

(d) liquidation preference,

(e) voting rights,

(f) anti-dilution provisions, and

(g) registration rights.

RealDealDocs offers the following types of term sheets: Term Sheets, RE Term Sheets, M&A Term Sheets, Stock Purchase Term Sheets, and Acquisition of Rights Term Sheets.

 

Here are 3 actual term sheets currently available on RealDealDocs:

 

1) Erickson Air-Crane Incorporated Signs Binding Term Sheet Regarding Its Acquisition of the HRT Air Services Business

ERICKSON AIR-CRANE INC
Erickson Air-Crane Incorporated
Petroleo, SA

 

2) LEHMAN BROTHERS RESIDENTIAL MORTGAGE FINANCE PRELIMINARY TERM SHEET

$246,886,000 (APPROXIMATE)
INDYMAC RESIDENTIAL MORTGAGE-BACKED TRUST
SERIES 2005-L3 MORTGAGE-BACKED CERTIFICATES, SERIES 2005-L3
INDYMAC ABS INC

 

3) TERMS OF THE AMENDED AND RESTATED EQUITY GRANT PROGRAM FOR NONEMPLOYEE DIRECTORS UNDER THE BLUCORA, INC. RESTATED 1996 FLEXIBLE STOCK INCENTIVE PLAN

BLUCORA, INC.
Blucora, Inc

 

 

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