Term sheet

A document summarizing proposed key terms of an investment or financing before definitive agreements. It is often largely nonbinding, while specified provisions may be binding depending on the wording and applicable law.

Term sheet in practice

Hypothetical: an investor proposes valuation, investment size, and governance terms subject to diligence and definitive agreements. The term sheet identifies confidentiality and exclusivity provisions as binding while marking the proposed investment terms as nonbinding. This does not itself make the investment certain or fix the final purchase price.

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