What Term Sheet means
Term Sheet generally refers to a preliminary outline of proposed deal terms used before definitive agreements are negotiated. The exact effect depends on the document, governing law, facts, and defined terms.
Business example
A financing term sheet may summarize valuation, security type, investor rights, board terms, closing conditions, and expenses before full documents are drafted.
Do not confuse it with
A term sheet is not automatically nonbinding. Confidentiality, exclusivity, expenses, governing law, or other provisions may be stated as binding.
What to check in the file
- Mark each provision as binding, nonbinding, or unclear.
- Model economics and dilution from the defined terms.
- Review control, consent, information, and exit rights.
- Calendar exclusivity, diligence, negotiation, and closing dates.
Sources to verify
Start with the linked authority, then check the governing document and the current agency, court, or state source that applies to the situation.
Before sharing records
- Keep originals in a controlled file and review a clearly dated working copy.
- Redact sensitive data unless the recipient is authorized and needs it.
- Label each document with its date, parties, version, jurisdiction, and status.
- Ask one focused question and identify the desired business outcome.