The Term Sheet for Sale of Business is a crucial document in Dutch M&A practice, typically prepared at the early stages of a business sale transaction after initial commercial discussions but before detailed due diligence and definitive agreements. It captures the essential terms agreed between parties, providing a framework for further negotiations and documentation. The document reflects Dutch market practice and legal requirements, including consideration of works council rights, competition law aspects, and corporate governance rules. While mostly non-binding, certain provisions like confidentiality and exclusivity are typically made binding. The term sheet helps identify potential deal-breakers early and streamlines the negotiation of definitive agreements by documenting key commercial points agreed between parties.
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1. Parties: Identification of the seller(s) and buyer(s), including full legal names and registration details
2. Background: Brief context of the proposed transaction and the business being sold
3. Definitions: Key terms used throughout the document
4. Transaction Structure: Whether share sale, asset sale, or other structure, including any phasing or carve-outs
5. Purchase Price: Proposed consideration, including payment structure, adjustments, and earn-outs if applicable
6. Key Assets: Overview of main assets included in the sale (properties, IP, contracts, etc.)
7. Key Conditions Precedent: Essential conditions that must be met before closing
8. Timeline: Key dates for due diligence, definitive agreements, and closing
9. Confidentiality: Binding provisions regarding confidential information
10. Exclusivity: Binding provisions regarding exclusive negotiations period
11. Costs: Allocation of transaction costs between parties
12. Governing Law: Specification of Dutch law as governing law
1. Employee Matters: Include when transfer involves significant workforce considerations, covering treatment of employees, consultations, and benefits
2. Regulatory Approvals: Include when transaction requires specific regulatory clearances (e.g., competition authority approval)
3. Tax Structure: Include when transaction involves complex tax considerations requiring specific structuring
4. Intellectual Property: Include when IP assets are a crucial part of the transaction
5. Environmental Matters: Include when business has significant environmental aspects or risks
6. Post-Closing Covenants: Include when specific post-closing obligations are crucial (e.g., non-compete, transition services)
7. Financing Conditions: Include when buyer's financing arrangements are material to the transaction
8. Break Fee: Include when parties want to specify compensation if either party terminates negotiations
1. Corporate Structure: Chart showing current and proposed ownership structure
2. Key Assets Schedule: List of material assets included in the transaction
3. Excluded Assets and Liabilities: List of specific items excluded from the transaction
4. Key Employees: List of important employees and proposed treatment
5. Timetable: Detailed timeline of key transaction milestones and responsibilities
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