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Investment term sheet template
The initial stage in an investment transaction is often for the company, its existing shareholders and the investor to agree a term sheet, outlining the key terms of the investment.
Choose from sample term sheet templates for an investment for either ordinary shares or preferred shares.
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Why use a Term Sheet?
The initial stage in an investment transaction, including early stage and venture capital investment transactions, is often for the company, its existing shareholders and the investor to agree a term sheet, outlining the key terms of the investment.
While these terms are typically not legally binding (aside from specific areas such as confidentiality and possibly exclusivity), they serve as the basis for the detailed terms in the investment agreement and other long form investment documents. Agreeing matters at this stage helps identify particularly contentious issues and should save time and expense in the long run.
Other preliminary documents for an investment transaction
Alongside the term sheet, the company being considered for investment should also require a confidentiality agreement (or NDA) with the potential investor. This will safeguard the confidentiality of the company’s proprietary information which an investor will need access to for the investor’s due diligence and decision-making.
An investor may also require an exclusivity agreement, under which the company agrees not to engage in discussions with other potential investors for a specified period. This allows the investor to invest time and resources in its due diligence and negotiations, knowing that the company isn’t simultaneously considering offers from competing investors.
