Term Sheet Negotiation Skills with Jonathan Snade
Partner, Manches LLP
On Thursday we gathered at the Manches LLP offices in Holborn to flex our muscles in horse trading – getting our heads around negotiating the nature of business with new investors through the term sheet. It is a delicate art of hard bargaining and shrewd exchange that enables the best deal for your business when going out for rounds of fundraising and it’s one that shouldn’t be done without the advice of an experienced lawyer or two.
We began the session by exploring the structure and vocabulary of the term sheet, an important piece of paper that defines the spirit of the deal, covering clauses such as; investor stakes, anti-diloution provisions, liquidation preference, construction of the board, vesting, etc. It’s not a legally binding document but as you move into the formal stages it is difficult to deviate away.
From there the group was given a case study and divided into two parties and then into teams of two; investors and founders. Each team had 30 mins to privately devise a strategy for negotiation and were then let loose at the table with their potential business partners. With the whiff of competition in the air things began to heat up. After many an enthusiastic debate, handshake and satisfied smile, deals were struck and the workshop drew to a close as the group compared results and decided on a winner.
Many thanks to Jonathan and Manches LLP for a great evening, as one person mailed afterwards – ‘really useful intro and it covers all the stuff you don’t get in an MBA’. You heard it here, the MiniMBA, from the street only!
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