Term Sheet Template

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What is a term sheet?

A term sheet outlines the basic terms and conditions under of an investment opportunity and is a non-binding agreement that serves as starting point for more detailed agreements, like a commitment letter, definitive agreement (share purchase agreement), or subscription agreement. Term sheets are often produced by investment bankers on behalf of corporate issuers.  Download our free Term Sheet Template.

 

term sheet template

 

Download the above term sheet template.

 

Term Sheet template – example

Note: This term sheet is only for educational purposes and should not be used for any other purpose.

Issuer:  [Name] (the “Corporation”)

Nature of the Offering: [Brokered or non-brokered] [private placement] (the “Offering”) of [Common Shares].

Type of Security: [Common Shares]

Offering Size: [Up to $50 million]

Issue Price: $[10.00] per [Share] (the “Issue Price”).

Commission: [6.0]%

Capitalization: Approximately $[60,000,000].  Set forth as “Exhibit [A]”.

Dividends: [Describe the dividend policy.]

Preferential Liquidation Rights: [Describe any liquidation preferences.]

Definition of Liquidation Event: [Include definition from legal counsel.]

Conversion Rights: [Describe, if applicable.]

Anti-Dilution: [For example: The Shares shall have certain customary anti-dilution protection for any share issuances at prices less than the Issue Price based on a weighted average formula, and subject to standard exceptions.]

Voting Rights: [Describe the voting rights.]

Use of Proceeds: [The proceeds from the Offering shall be primarily used for general corporate and working capital purposes.]

Closing Conditions: [Closing of the Offering shall be conditional upon the completion of satisfactory due diligence, the execution of requisite definitive agreements for completion of the Offering, receipt of all requisite corporate approvals and third party consents for the Offering. Etc.]

Agent: [Generic Capital Corp.]

Closing Date: [Date]

Note: This term sheet is only for educational purposes and should not be used for any other purpose.

 

Download the above term sheet template.

 

Documents in private capital raising transactions

Wondering where the term sheet fits in the overall process of raising capital for private companies?

Here is a list of all the main documents in private capital raising:

  1. Teaser / 1-Pager
  2. Non-Disclosure Agreement (NDA)
  3. Management Presentation
  4. Term Sheet
  5. Offering Memorandum
  6. Subscription Agreement

Typically the investment bankers or advisors on the transaction will send people a Teaser or single page marketing document outlining the investment opportunity.  If investors are interested after that they will sign a NDA and receive more detailed information such as the management presentation, an offering memorandum, and a Term Sheet.  The final stage will be a Subscription Agreement.

 

 

More resources

Knowing how to build a term sheet is an important investment banking skill-set.

In order to prepare for a career in investment banking, corporate development or private equity you may find these resources helpful:

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