A Term Sheet spells out the terms. It is a non-binding agreement that establishes a level of trust. It is a part of the due diligence phase, meaning there is an intention to proceed with the purchase. A general idea of how the transaction will play out might be included. A Term Sheet can open the door for negotiation and hopefully an investment or purchase.
Absolutely! One common blunder is not clearly understanding the terms in the term sheet, which could lead to confusion down the road. Just like not reading the fine print before signing a contract!
Yes, companies can sometimes have control over the conversion process, but it's typically laid out in the terms agreed upon in the term sheet. Think of it like having the first choice of dessert at a buffet - you’ve got some say in the matter!
Convertible debt financing is a win-win for both investors and companies. Investors get a chance to convert their loans into stock if the company does well, while companies get the funding they need without giving away ownership right away.