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Merger Term Sheet for the United States

Merger Term Sheet Template for United States

A Merger Term Sheet is a non-binding document that outlines the key terms and conditions of a proposed merger between two companies under U.S. law. It serves as a foundation for negotiating and drafting the definitive merger agreement, covering essential aspects such as transaction structure, purchase price, closing conditions, and timeline. While not legally binding (except for certain provisions like confidentiality), it demonstrates the parties' serious intent to pursue the transaction and provides a framework for further negotiations.

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What is a Merger Term Sheet?

The Merger Term Sheet is a crucial preliminary document used in U.S. merger and acquisition transactions to establish the framework for negotiations. It typically precedes the more detailed definitive merger agreement and serves as a roadmap for the transaction. While most provisions in a Merger Term Sheet are non-binding, it helps parties align their expectations and identify potential deal-breakers early in the process. The document typically includes key terms such as valuation, payment structure, conditions precedent, and timing considerations. It's particularly important in complex transactions where multiple stakeholders are involved and significant due diligence is required.

What sections should be included in a Merger Term Sheet?

1. Parties: Identification of merging entities, including legal names and jurisdictions

2. Background: Brief description of each company and the purpose of the proposed merger

3. Transaction Structure: Type of merger, consideration, and basic deal structure

4. Purchase Price: Consideration details, payment structure, and any adjustments

5. Due Diligence: Scope and timeline of due diligence process

6. Closing Conditions: Key conditions that must be met to complete the merger

7. Timeline: Expected dates for key milestones and closing

What sections are optional to include in a Merger Term Sheet?

1. Employee Matters: Treatment of employees post-merger - include when significant workforce integration is involved

2. Exclusivity: No-shop provisions and exclusivity period - include when parties want to ensure exclusive negotiations

3. Governance: Post-merger management structure - include in mergers of equals or when significant management changes are planned

4. Break-up Fee: Termination fees and conditions - include in larger transactions or when significant due diligence costs are expected

What schedules should be included in a Merger Term Sheet?

1. Capital Structure: Current and post-merger ownership structure

2. Key Assets: List of material assets included in the transaction

3. Required Approvals: List of regulatory and third-party approvals needed

4. Timeline Schedule: Detailed timeline of key dates and milestones

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Cost

Free to use
Clauses































Industries

Securities Act of 1933: Federal law governing the registration and disclosure requirements for securities offerings in primary markets

Securities Exchange Act of 1934: Federal law regulating secondary market trading, establishing the SEC, and setting requirements for public companies

Hart-Scott-Rodino Act: Requires companies to file pre-merger notifications with the FTC and DOJ for antitrust review of certain mergers and acquisitions

Clayton Antitrust Act: Prohibits specific anticompetitive practices and supplements the Sherman Act in antitrust regulation

Sherman Antitrust Act: Primary federal antitrust statute prohibiting monopolistic business practices and agreements restraining trade

Sarbanes-Oxley Act: Sets requirements for public company boards, management, and accounting firms, focusing on financial transparency and corporate responsibility

Dodd-Frank Act: Comprehensive financial reform legislation affecting mergers involving financial institutions and related entities

State Corporation Laws: State-specific laws governing corporate formation, operation, and transactions (e.g., Delaware General Corporation Law)

Blue Sky Laws: State-level securities laws regulating the offering and sale of securities to protect investors from fraudulent activities

SEC Regulations: Rules and regulations issued by the Securities and Exchange Commission governing public company mergers and securities transactions

Stock Exchange Rules: Requirements set by exchanges like NYSE or NASDAQ for listed companies involved in merger transactions

Internal Revenue Code: Federal tax provisions affecting the structure and tax consequences of merger transactions

Employment Laws: Federal and state laws governing employee rights, benefits, and protections during corporate mergers

Environmental Regulations: Federal and state environmental laws affecting merger due diligence and liability considerations

Intellectual Property Laws: Laws governing the transfer and protection of patents, trademarks, copyrights, and trade secrets in mergers

Foreign Investment Laws: Regulations governing foreign investment in U.S. companies, including CFIUS review requirements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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