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What is a Term Sheet?

You're about to make an offer on interests or assets of a company. You may want to use a Term Sheet to establish that both parties, yourself and the seller, agree on the general terms of the deal before starting due diligence. Consider this your mini-proposal before investing more time and money in making your final decision. As the seller of interests or assets, term sheets can also be useful to begin a negotiation.

A Term Sheet spells out the terms. Pretty simple, right? You can include pretty much anything you'd like in a term sheet template. Just keep in mind that it's a non-binding agreement that establishes a level of trust that if things look right in the diligence phase, you are intending to proceed with the purchase. A general idea of how the transaction will play out might be included. A Term Sheet can open the door for negotiation and hopefully an investment or purchase.

When to use a Term Sheet:

You are interested in offering potential interests or assets of your business for purchase and you want to provide the general terms of such a business deal for the potential investor/purchaser to review.

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Term Sheet

Preamble: This term sheet sets forth the proposed terms and conditions for

This term sheet is only for discussion purposes and is not intended to impose any legal obligation on any party.


	1.	Purchase of Interests

hereinafter the Purchaser would acquire from hereinafter the Company, the following properties and assets:

The properties and assets purchased would be hereinafter referred to as the Assigned Interests.


	2.	Purchase Price

In consideration for the transfer and sale by the Company of the Assigned Interests to Purchaser, Purchaser would pay to the Company. The payment terms would be as follows:


	3.	Representations and Warranties

(a) The Purchaser and Company will comply with applicable law in the performance of above transaction;

(b) Company has good title and ownership over the Assigned interests;

(d) There is no pending Proceeding that has been commenced against Company and the Purchaser that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions.

(e)The Purchaser or Company, under no circumstances shall make any public disclosure about the Transaction prior to the Closing. Any such disclosure at or after the Closing must be mutually agreeable to both parties; provided, however, that nothing in this provision will prevent the Company from fulfilling any legal disclosure obligations.

(f)The Company agrees that from the date hereof until the Closing Date, the Company shall neither directly nor indirectly, through brokers, agents or otherwise, solicit or accept offers or conduct negotiations or enter into contracts with respect to the Assigned Interests or a Replacement Transaction. Should the Company receive an unsolicited offer relating to the Assigned Interests, it will promptly refuse such offer.


	4.	Closing Date

The necessary steps to reach a closing (the "Closing") would be completed by (the "Closing Date"). Closing Date may be subjected to extension or postponement by mutual agreement of the parties. This Term Sheet will expire on .


	5.	Deliveries at Closing


	6.	Governing Law

This term sheet shall be governed by and construed in accordance with the laws of the state of .


	7.	Accounting Matters

Companys Accountant will prepare financial statements in accordance with GAAP. The financial statements of the company will be audited prior to closing.