The Buyout Term Sheet is a crucial document used in the initial stages of merger and acquisition transactions in Canada. It serves as a roadmap for the transaction, documenting the parties' preliminary understanding of key commercial and legal terms before proceeding with detailed due diligence and definitive agreements. The document typically follows Canadian market practice and must consider various federal and provincial regulations, including securities laws, competition law, and corporate legislation. While most provisions are non-binding, certain sections like confidentiality and exclusivity are typically binding. The term sheet helps align parties' expectations early in the process, reducing the risk of misunderstandings during later negotiations and potentially saving significant time and costs.
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1. Parties: Identification of buyer, seller, and target company/business
2. Background: Brief context of the proposed transaction
3. Definitions: Key terms used throughout the term sheet
4. Transaction Structure: Type of transaction (share purchase, asset purchase, merger)
5. Purchase Price: Consideration amount, form, and payment terms
6. Timing: Key dates, including signing, due diligence period, and closing
7. Due Diligence: Scope and process of due diligence investigation
8. Conditions Precedent: Key conditions that must be met before closing
9. Exclusivity: Period and terms of exclusive negotiations
10. Confidentiality: Confidentiality obligations of the parties
11. Costs: Allocation of transaction costs between parties
12. Binding Effect: Specification of which provisions are binding/non-binding
1. Purchase Price Adjustments: Mechanisms for adjusting price based on working capital, earn-outs, etc. - used in complex transactions
2. Management Arrangements: Terms for key management retention/compensation - used when management continuity is crucial
3. Financing Conditions: Details of transaction financing - used when buyer requires external funding
4. Employee Matters: Key terms regarding employee treatment - used when significant workforce is involved
5. Real Estate: Property-related terms - used when real estate is a material component
6. Intellectual Property: IP-specific terms - used when IP is a key asset
7. Tax Structure: Preliminary tax structuring considerations - used in tax-sensitive transactions
8. Break Fee: Terms of break fee/reverse break fee - used in larger, competitive transactions
1. Cap Table: Current and post-transaction capitalization table
2. Key Assets: List of material assets included in transaction
3. Material Contracts: List of key contracts requiring attention/consent
4. Purchase Price Calculation: Detailed breakdown of purchase price components
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Financial Services
Real Estate
Healthcare
Retail
Energy
Mining
Agriculture
Professional Services
Transportation & Logistics
Media & Entertainment
Relevant Teams
Legal
Finance
Corporate Development
Mergers & Acquisitions
Strategy
Tax
Executive Leadership
Business Development
Risk Management
Compliance
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Managing Director
Corporate Development Director
Investment Banking Director
M&A Director
Business Development Manager
Corporate Lawyer
Transaction Advisory Partner
Private Equity Principal
Investment Director
Strategy Director
Financial Controller
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