I've got a Term Sheet, what's next? Should I sign it?

Firstly, well done!

Secondly, although it is tempting to get the Term Sheet signed up immediately and formally kick off the process, we would recommend that you ask your lawyers to take a look over the Term Sheet before it is signed.

Most investors really know what they’re doing and its unlikely that the Term Sheet will have major issues. But we’ve seen some companies sign up to very strong, off-market or unsuitable terms because they have rushed to get the Term Sheet signed before asking a lawyer to look at it – even with the best will in the world, investors can sometimes offer up standard terms which may not be entirely suitable to your company’s circumstances.

An investor may be keen to sign, but they aren’t going to complain about you taking legal advice when needed (and if they do, that may be a bad sign in itself…).

We’re always happy to cast an eye over a Term Sheet when needed. If it looks good to go we’ll tell you – incurring time and cost on something which already works well isn’t good for anyone. However we’ll also tell you if we think it needs
some work before signing, and can explain the costs of helping you through the next steps before you incur any.

If you’d like to better understand some of the detail in your Term Sheet before speaking to a lawyer, feel free to take a look at our “Anatomy of a Term Sheet” series which breaks down and explains some of the phrases and provisions you are likely to see.

For more information on term sheets, see if a term sheet is non-legally binding, does it really matter what it contains?