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What issues should be addressed in a term sheet for an investment in a business?

A term sheet for investing in a business should cover areas including, but not limited to:

  • amount of investment
  • means of investment (equity or debt)
  • post-investment capital structure
  • distributions during the course of the business
  • conditions for selling the business
  • conditions for selling existing ownership interests in the business
  • conditions for issuing new ownership interests in the business
  • management and control of the business
  • protection of holders of minority ownership interests
  • ancillary agreements (such as employment agreements and non-competition covenants)
  • restrictions on offering the business to third parties during the course of negotiations between the buyer and the seller

Our firm can assist you in negotiating specific terms in each of these areas.