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Business Purchase Term Sheet Template for India

A Business Purchase Term Sheet is a preliminary, mostly non-binding document that outlines the key terms and conditions for a proposed business acquisition or purchase in India. It serves as a foundation for negotiating and drafting definitive agreements, incorporating provisions that comply with Indian corporate law, including the Companies Act 2013 and other relevant legislation. The document captures essential elements such as transaction structure, purchase price, key assets, conditions precedent, and timeline, while considering Indian regulatory requirements and market practices. It helps parties align their understanding before proceeding with detailed due diligence and final documentation.

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What is a Business Purchase Term Sheet?

The Business Purchase Term Sheet is a crucial preliminary document used in Indian business acquisitions to establish the framework for a potential transaction. It is typically prepared after initial discussions between parties but before detailed due diligence and definitive agreements. The document outlines key commercial terms, conditions, and the proposed structure of the transaction, while considering Indian regulatory requirements and market practices. While mostly non-binding (except for specific provisions like confidentiality and exclusivity), it serves as a roadmap for the transaction and helps identify potential deal-breakers early in the process. The term sheet needs to comply with Indian corporate laws, including the Companies Act 2013, and may require consideration of sector-specific regulations, foreign investment rules, and competition laws depending on the transaction size and nature.

What sections should be included in a Business Purchase Term Sheet?

1. Parties: Identification of the buyer, seller, and the target business entity

2. Background: Brief description of the parties and the purpose of the proposed transaction

3. Definitions: Key terms used throughout the term sheet

4. Transaction Structure: Overview of the proposed transaction structure (asset sale, share sale, etc.)

5. Purchase Price: Proposed consideration and payment terms, including any adjustments or earn-outs

6. Key Assets/Scope: Description of the business assets, shares, or operations being purchased

7. Key Terms: Essential commercial terms including timing, conditions precedent, and any major obligations

8. Due Diligence: Process and timeline for conducting due diligence

9. Exclusivity: Terms of exclusive negotiation period, if applicable

10. Confidentiality: Binding provisions regarding confidentiality of negotiations and information

11. Costs: Allocation of transaction costs between parties

12. Timeline: Expected timeline for completing the transaction

13. Governing Law: Applicable law and jurisdiction

14. Non-Binding Nature: Statement clarifying which provisions are binding and non-binding

What sections are optional to include in a Business Purchase Term Sheet?

1. Management/Employment: Include when key management retention or employment terms are crucial to the deal

2. Regulatory Approvals: Include when specific regulatory clearances are required for the transaction

3. Financing: Include when purchase is subject to financing arrangements

4. Non-Compete: Include when restrictions on seller's future business activities are required

5. Intellectual Property: Include when IP assets are a significant part of the transaction

6. Environmental Matters: Include when environmental liabilities or compliance are significant concerns

7. Real Estate: Include when property assets or leases are material to the transaction

8. Tax Structure: Include when specific tax considerations need to be addressed

What schedules should be included in a Business Purchase Term Sheet?

1. Asset Schedule: List of key assets included in the transaction

2. Price Calculation: Detailed breakdown of purchase price calculation methodology

3. Key Contracts: List of material contracts to be transferred or requiring consent

4. Excluded Assets/Liabilities: List of specific items excluded from the transaction

5. Required Consents: List of third-party or regulatory consents needed

6. Key Employees: List of key employees or management team members

7. Timeline Schedule: Detailed transaction timeline with key milestones and deadlines

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

India

Cost

Free to use

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