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Key Elements of a Term Sheet

December 1, 2013
By: Kevin Spafford, Farm Journal Columnist

Considering selling the operation to an unrelated third party?

(Download this tool as a PDF)

A term sheet will help:

  • Ask the right questions and position the answer.
  • Facilitate discussions in a constructive manner.
  • Detail the conditions of the deal as both parties agree.
  • Address the complex issues and generate definitive resolutions.
  • Finally, annotate the deal as an outline to draft legal agreements.

Since term sheets are non-binding, your notes don’t need to be in legal terms. When completed, a term sheet will contain summaries and specifications of a pending merger/acquisition. The document may start simple, listing the parties involved, compensation to be paid and the manner of payment.


Potential Buyer Name: ____________________________________ Date: _________________

Binding: Yes_____ No_____


Price: $_____________________

Form of payment: $_________ cash $_________ note/term $_________ retained ownership

Earnout: $_____________ per _______________ (period of time).

Legal structure: _________________________________________________________________ (based on input from respective accountants).

Escrow: $_____________________

Held by: ______________________

Period of time: _________________


Due Diligence:

Audit: ________________________________________________________________________

Inspection: ____________________________________________________________________

Regulatory approval: ____________________________________________________________

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FEATURED IN: Farm Journal - December 2013
RELATED TOPICS: Business Continuity Tool

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