M&A Term Sheet Template

Date: [Date]
Buyer: [Buyer Name]
Seller/Target: [Seller/Target Name]

1. Transaction Overview

• Structure: [Asset purchase/Stock purchase/Merger].
• Description of business being acquired.
• Estimated closing date: [Date].

2. Purchase Price

• Total consideration: $[Amount].
• Adjustments: working capital, indebtedness, cash, transaction expenses.
• Payment form: [Cash, stock, seller note, earn-out].
• Earn-out terms (if applicable): performance metrics, measurement periods, caps.

3. Escrow/Holdback

• Amount: $[Amount] or [Percentage]% of purchase price.
• Duration: [Number] months.
• Purpose: indemnification, purchase price adjustments.

4. Closing Deliverables

• Bill of sale, assignment and assumption, stock certificates, board/shareholder resolutions, payoff letters.

5. Due Diligence

• Buyer diligence period: [Number] days.
• Access to financial statements, contracts, employment agreements, IP, litigation files.

6. Representations and Warranties

• Standard corporate representations (organization, authority, capitalization).
• Financial statements, absence of undisclosed liabilities.
• Compliance with laws, material contracts, IP, employment matters, taxes, environmental, litigation.
• Survival period: [Number] months/years.

7. Covenants

• Conduct of business between signing and closing (ordinary course, restrictions on capital expenditures, hiring, etc.).
• Access for ongoing due diligence.
• Efforts to obtain regulatory and third-party approvals.

8. Indemnification

• Indemnity cap: [Percentage]% of purchase price.
• Basket/deductible: $[Amount].
• Survival periods for general reps, fundamental reps, and special matters.
• Procedures for claims and dispute resolution.

9. Conditions to Closing

• Accuracy of representations and warranties (bring-down).
• Compliance with covenants.
• Receipt of regulatory approvals (antitrust, industry-specific).
• Absence of material adverse effect.
• Delivery of closing certificates and ancillary documents.

10. Employees and Benefits

• Offers of employment to key employees.
• Treatment of benefit plans and accrued vacation.
• Non-compete/non-solicitation agreements with founders or key personnel.

11. Confidentiality and Non-Disclosure

• Parties bound by existing NDA; maintain confidentiality of negotiations.

12. Exclusivity (Binding)

• Seller agrees to negotiate exclusively with Buyer for [Number] days and to cease discussions with other parties.

13. Expenses

• Each party bears its own expenses unless otherwise agreed.

14. Governing Law

• Governed by laws of [State/Country].

15. Binding Effect

• Binding provisions: Sections on Exclusivity, Confidentiality, Governing Law, Expenses, and Miscellaneous.
• All other terms non-binding pending definitive agreements.

16. Signatures

Buyer: ________
Name/Title: [Authorized Signatory]

Seller: ________
Name/Title: [Authorized Signatory]

This term sheet summarizes key deal points for negotiation and drafting of definitive M&A agreements.