PRIVATE EQUITY TERM SHEET
I. Introduction
This Private Equity Term Sheet represents a preliminary agreement between [Your Company Name], a private equity firm, and [Target Company Name], outlining the key terms and conditions for a potential investment deal. The purpose of this document is to set the framework for negotiations and formalize the main points of the investment, ensuring clarity and alignment between the parties involved.
II. Parties Involved
[Your Company Name]: The private equity firm considering the investment.
[Target Company Name]: The company seeking investment.
III. Investment Details
Investment Amount: The total investment amount proposed by [Your Company Name] is $5 million to be invested in [Target Company Name].
Investment Structure: The investment will be structured as equity with specific terms and conditions outlined in this Term Sheet.
Valuation: The valuation of [Target Company Name] for this investment is $20 million, based on discounted cash flow analysis.
IV. Key Terms and Conditions
Investment Purpose: The investment is intended for the expansion of product lines and market penetration, including entering new geographic regions.
Equity Ownership: Upon investment, [Your Company Name] will hold 30% of equity in [Target Company Name].
Board Representation: [Your Company Name] will have the right to appoint two representatives to the board of directors of [Target Company Name].
Exit Strategy: The parties agree to discuss and finalize the exit strategy, including potential timelines and methods such as IPO, acquisition, or other means.
Governance and Decision-Making: The parties will collaborate on key decisions regarding strategic initiatives, major investments, and corporate governance matters.
Key Performance Indicators (KPIs): [Target Company Name] agrees to achieve KPIs related to revenue growth, customer acquisition, and profitability targets.
V. Legal and Regulatory Considerations
Due Diligence: [Your Company Name] will conduct thorough due diligence on [Target Company Name] covering financial, legal, and operational aspects.
Compliance: Both parties will ensure compliance with relevant laws, regulations, and industry standards throughout the investment process.
Confidentiality: Confidential information shared during negotiations and due diligence will be protected and used solely to evaluate this investment.
VI. Closing Conditions
Documentation: The parties will execute a formal investment agreement, incorporating the terms outlined in this Term Sheet, upon meeting all closing conditions.
Approvals: The investment is subject to approval by the boards of directors of both [Your Company Name] and [Target Company Name]
VII. Miscellaneous
Expenses: Each party will bear its expenses related to the negotiation, due diligence, and documentation of this investment.
Governing Law: This Term Sheet shall be governed by and construed in accordance with the laws of [Jurisdiction].
Amendments: Any amendments or modifications to this Term Sheet must be in writing and signed by authorized representatives of both parties.
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