Using a Term Sheet – Following Best Business Practices
Starting a new business deal can take a lot out of you. Unless the unheard of happens and both parties are on the same page to begin with, there are many different factors that come into play. Both parties need to make concessions and negotiations can drag on for weeks, months, or even years. Before you consult with a business attorney to draw up a legal contract, it is important that both parties can agree on the terms. This ensures that you don’t spend more than you need to on legal fees, and makes sure the final contract can move forward without delay.
What Is a Term Sheet?
One of the best tools that business owners can use for negotiations is a term sheet. Term sheets act as unofficial documents that help clear up details of an agreement and can be exchanged between parties to move the negotiation process forward. Since the conditions are not binding, both parties can freely make adjustments without worrying about specific clauses that might cause a legal hang up.
The primary reason that business owners use term sheets is to ensure that they do not prematurely spend money to get a legal contract drawn up. After all, some business deals fall through entirely, and even if you do end up coming to an agreement, it can be a major inconvenience waiting for the lawyer to revise the contract each time terms are adjusted.
Finalizing the Details
By going about negotiations this way, it often helps eliminate any misunderstanding and smooth out the process. Once both parties have agreed on the final terms of the agreement, the term sheet can be used as a template to draw up a legal contract. All of the appropriate wording is added in to make sure the details are binding and conform to the original sheet.
Rather than immediately contacting a lawyer when you are starting a new business agreement, you may want to make sure that you have the details ironed out. This helps avoid unnecessary costs and should provide for a smoother flow at the negotiation table. When you find that you have questions about a term sheet and wish to consult with a Boston business attorney on ways to ensure you follow best practices when planning a business deal, contact Jeffrey Cymrot of Sassoon & Cymrot for individual guidance and consultation.