Cogs In The Machine - Termsheets
When an inventor builds a machine, he makes sure that he knows how each of the parts work and how they fit together. The more planning and preparation he puts into the machine,
the more smoothly it
operates when he switches it on. If the same kind of detailed planning and preparation is put into the legal administration of a company, then selling that company should be a much smoother process. The intention of this series of articles is to assist with that planning by looking at some of the cogs in the machine and providing some insight into what each one does.
Over the course of this series of articles we first considered cogs that are put in place earlier in a company’s life and, later, those that are put in last – the planning and preparation that management put into the major transactions in the life of their company. From the first to the last, each of the cogs in a gear chain has an effect on the others and on the overall efficiency of the machine. In the same way, the success of a company’s eventual sale or
fundraising round depends on each of the decisions that management has taken during the company’s life.
This article deals with the last cog to fall into place – the document that sets out the main terms for a major, transformative transaction. That might be a substantive commercial contract, or more usually an investment in or sale of the company. I will use the word ‘termsheet’ for the sake of simplicity – in practice the document may be referred to as any one of a number of things, from a letter of intent through a heads of agreement to a memorandum of understanding.
Whatever its title or format, the main purpose of a termsheet is to set out the key commercial terms of the proposed transaction – the proverbial ‘30,000 feet’ view.
Both parties
24 entrepreneurcountry
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60