M&A | The Term Sheet

In an acquisition, it is common for parties to spend dozens of hours and thousands of dollars in advisor fees. This happens when they have not agreed on the basic terms and structure of a transaction. Or, for example when parties do (start to) disagree at a later point in the process. To avoid these problems, a term sheet can help.

A term sheet is used to start negotiations by allowing the parties to focus on the key terms of a transaction before a detailed letter of intent or purchase agreement is drafted.

The term sheet is a brief summary of the key points of the transaction, such as the sale price, financing terms, scope (and duration) of due diligence, non-competition clause, contingencies and other essential terms.