Overview of Term Sheet
A Term Sheet is a non-binding agreement that outlines the basic terms and conditions under which an investment will be made. It serves as the foundation for preparing legally binding agreements such as Shareholders Agreements or Investment Agreements. Corporate Analytica ensures legally sound and investor-ready term sheets that protect both startup founders and investors.
Advantages of Having a Term Sheet
- Defines deal terms early, avoiding misunderstandings
- Speeds up the investment process
- Clarifies rights, obligations, and roles
- Establishes a foundation for legal documentation
- Boosts investor confidence in the deal process
Who Needs a Term Sheet?
- Startups seeking equity or convertible investments
- Angel investors and venture capital firms
- Founders entering joint ventures or strategic partnerships
- Companies negotiating mergers or acquisitions
Information Required for Drafting
- Company valuation and funding amount
- Details of the investor and founders
- Equity or debt instrument structure
- Board composition and voting rights
- Exit clauses, liquidation preference, and anti-dilution terms
Term Sheet Drafting Process
- Step 1: Understand business and funding requirements
- Step 2: Collect key deal information
- Step 3: Draft initial term sheet and review with stakeholders
- Step 4: Finalize clauses with legal and financial experts
- Step 5: Deliver final non-binding term sheet for signature
Why Choose Corporate Analytica?
- Specialized legal drafting for fundraising and M&A
- Clarity on investor-friendly and founder-protective clauses
- End-to-end support from drafting to negotiation
- Customizable templates and expert consultation
- Affordable, fast, and confidential services
After Term Sheet Signing
- Begin due diligence process
- Draft Shareholders Agreement (SHA) or Investment Agreement
- Register or report investments with authorities if required
- Implement agreed-upon governance structures
- Ensure compliance with SEBI/ROC if applicable
Frequently Asked Questions (Term Sheet)
Q1. Is a term sheet legally binding?
Most term sheets are non-binding except for certain clauses like confidentiality, exclusivity, or dispute resolution. It’s a preliminary agreement.
Q2. Can a founder modify a term sheet after signing?
Once signed, changes require mutual consent. Major changes typically require drafting a new term sheet.
Q3. What happens after a term sheet is signed?
The deal proceeds to due diligence, final agreement drafting (like SHA), and investment execution based on agreed terms.
Q4. Can I use a template for a term sheet?
Templates are useful, but professional customization is recommended to address specific investment scenarios and legal considerations.