A Term Sheet For Acquisition Of Shares is a crucial preliminary document used in Australian M&A transactions to establish the framework for share purchase negotiations. It is typically prepared after initial commercial discussions but before detailed due diligence and definitive documentation. The document captures key commercial terms, conditions, and timing requirements for the proposed transaction, providing a roadmap for lawyers to draft the final share purchase agreement. While predominantly non-binding, it often includes certain binding provisions such as confidentiality, exclusivity, and costs. The term sheet must comply with Australian corporate law requirements, including the Corporations Act 2001 (Cth), and may need to address FIRB approval requirements for foreign investors. It serves as a critical tool for aligning parties' expectations and expediting the negotiation of definitive transaction documents.
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1. Parties: Identification of buyer, seller, and target company
2. Background: Context of the proposed transaction and current ownership structure
3. Definitions: Key terms used throughout the term sheet
4. Transaction Structure: Overview of the proposed share acquisition structure
5. Purchase Price: Proposed consideration and payment terms
6. Timing: Key dates including signing, due diligence, and completion
7. Due Diligence: Scope and process of due diligence investigation
8. Key Conditions Precedent: Essential conditions that must be satisfied before completion
9. Regulatory Approvals: Required regulatory clearances and approvals
10. Exclusivity: Terms of exclusive negotiation period
11. Confidentiality: Confidentiality obligations of the parties
12. Costs: Allocation of transaction costs
13. Binding Nature: Specification of which provisions are binding vs non-binding
1. Break Fee: Details of any break fee payable, used in larger transactions or where significant due diligence costs are involved
2. Management Arrangements: Post-completion management structure, used when changes to management are contemplated
3. Warranty and Indemnity Insurance: Insurance arrangements, included for larger transactions where W&I insurance is contemplated
4. Employee Matters: Treatment of employee shares, options or specific employment arrangements, used when employee interests need addressing
5. Interim Period Obligations: Obligations between signing and completion, included for longer transaction periods
6. Post-Completion Adjustments: Price adjustment mechanisms, used in deals with complex pricing structures
7. Shareholder Rights: Special rights or arrangements between continuing shareholders, used in partial acquisitions
1. Corporate Structure Chart: Pre and post-completion ownership structure diagrams
2. Share Capital Details: Detailed breakdown of target company's share capital
3. Timing Schedule: Detailed timeline of key transaction milestones and responsibilities
4. Purchase Price Calculation: Detailed methodology for calculating the purchase price
5. Key Assets Schedule: List of material assets included in the transaction
6. Required Consents: List of third-party and regulatory consents required
7. Due Diligence Requirements: Detailed due diligence requirements and process
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