A term sheet is a preliminary, typically non-binding document that summarises the key economic and governance terms of a proposed investment. In venture financing, it covers valuation, investment amount, investor rights (board seats, information rights, anti-dilution provisions, liquidation preferences), and conditions to closing. In private equity buyouts, a term sheet or LOI specifies purchase price, deal structure, exclusivity, and key due diligence conditions.
Term sheets signal serious intent from both parties and form the basis for drafting definitive legal agreements (shareholders' agreements, subscription agreements, etc.). They establish the negotiating framework and are typically accompanied by an exclusivity (or 'no-shop') period that prevents the target from soliciting competing offers while negotiations proceed. In Southeast Asia's cross-border deals, term sheet negotiations can be complex, with differences in standard practices between investors from different jurisdictions.