Joint Venture Term Sheet

Summary

This template nonbinding term sheet summarizes the principal terms of a private joint venture transaction under a limited liability company in which two parties are securityholders in a majority/minority split. This template contains practical guidance, drafting notes, and alternate and optional clauses. A term sheet is a document that outlines the key elements of a proposed transaction. It is typically one of the first documents prepared in connection with a proposed transaction, prior to due diligence process and intensive drafting of definitive documents. Term sheets may be used in a variety of settings, including mergers and acquisitions, joint ventures, private securities offerings, and lending transactions. The term sheet is an important document because it memorializes key terms that the parties have agreed upon, without necessarily binding either party to them, and helps the parties ensure they are aligned and working toward the same goals early in their discussions. A term sheet, also known as a letter of intent or memorandum of understanding, is typically drafted in the form of a chart, as it is below. However, a letter or short agreement is also acceptable. Although it is acceptable for term sheets to contain certain sections which are binding, and others which are nonbinding, this term sheet is drafted under the assumption that no terms are binding. For more information and related content, see Letter of Intent to Purchase Stock, Letter of Intent (Asset Acquisition), Letter of Intent to Acquire a Public Company by Merger, Letters of Intent in Private M&A Deals, Letters of Intent in Public M&A Deals, and Term Sheets.