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Essential Information for Term Sheet Signing: Save a Week

This checklist outlines all the critical information you need to have gathered and ready before signing a term sheet. By having everything organized in advance, you can significantly reduce the time it takes to complete the closing process, potentially cutting up to a week off your timeline.

• This organized approach ensures a smoother and more efficient transaction, minimizing delays and maximizing your efficiency.

Why is This Information Essential?

Having the right information readily available before signing a term sheet is crucial for a number of reasons:

• It allows you to thoroughly review the terms and conditions of the deal before committing.
• It helps you identify any potential issues or concerns early on, giving you time to address them before the closing process begins.
• It streamlines the closing process, saving you valuable time and resources.

Key Information to Have Ready

This checklist covers the key information categories to have ready before signing a term sheet, ensuring a seamless closing process.

Financial Information

This section focuses on gathering the financial details required for a successful closing.

• Financial Statements: Provide updated and accurate financial statements, including balance sheets, income statements, and cash flow statements. This provides a clear picture of your company's financial health.
• Budget Projections: Prepare detailed budget projections for the upcoming fiscal year, outlining your anticipated revenues, expenses, and profitability. This helps assess future financial performance.
• Tax Returns: Make sure to have recent tax returns readily available, including both federal and state filings. These provide further financial transparency.

Legal Information

Having legal documents readily available is essential for navigating the closing process efficiently.

• Articles of Incorporation/Bylaws: Provide copies of your company's articles of incorporation and bylaws, which define the legal structure and governing documents.
• Operating Agreements: If your business is a partnership or LLC, have the operating agreement prepared and readily available. This outlines ownership, management, and governance rules.
• Intellectual Property Rights: Ensure all intellectual property rights are properly documented and protected. This includes patents, trademarks, copyrights, and trade secrets.

Operational Information

Having operational details organized allows for a comprehensive overview of your business.

• Customer Contracts: Provide details on key customer contracts, including their terms, durations, and revenue contributions. This showcases the strength of your client base.
• Supplier Agreements: Outline your supplier agreements, covering terms of supply, pricing, and any critical relationships.
• Employee Information: Provide relevant details about your workforce, such as employment contracts, compensation structures, and benefits packages.

Other Information

Gathering additional information beyond the core categories can contribute to a smooth transaction.

• Insurance Policies: Provide information about your company's insurance policies, including coverage types and limits. This demonstrates risk management practices.
• Environmental Compliance: If your industry requires it, gather information on your environmental compliance records and any certifications you hold.
• Company History and Background: Prepare a concise summary of your company's history, milestones, and key achievements. This helps potential investors understand your journey and track record.

Conclusion

By having this critical information organized and ready before signing a term sheet, you can significantly streamline the closing process and save valuable time. This proactive approach ensures a smooth and efficient transaction, allowing you to focus on the strategic aspects of the deal.