1Arise Advance Ascend
1. What and Why
2. Valuation
3. Quantum of fund
4. Structure
5. Exit
6. Exit Support
7. Protective/Participative Rights
8....
What is a term sheet ?
• A statement of intent setting forth the basic terms and
conditions under which a transaction will...
What is Valuation?
• It is the estimation of the worth of your business
How is it done ?
• In stead of following the more ...
5
5
Aggrandize Glorify Soar High
Company
Preference
Shares
Investor’s Choice
Equity
Shares
Entrepreneur's
Choice
6
6Ascend Outshine Go Places
Why discussion on Exit now?
How can an investor exit?
• Promoters buyback
• Company buyback
• Strategic Sale
• Initial Pub...
Rights
that
facilitate
Exit
Liquidation
preference
Right of
First Offer
Drag Along
Rights
Tag Along
Rights
Share
Option
8
...
9
Spur Stimulate Intensify 9
Protective
Rights
Board
Governance
Information
Rights
Budget
Approvals
Pre-emptive
Rights
Arise Wake Up Rise Up 10
10
1. Understand and assess the impact of the terms
before you sign
2. Don’t negotiate hard but negotiate Smart
3. Take the a...
Evolve Emerge Enlarge 12
12
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Term sheet

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Presentation made by Mr P Ramakrishna, General Partner, Utthistha Yekum Fund, during NPC Hyderabad, 3rd Apr. What is term sheet, key components and what they mean?

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Term sheet

  1. 1. 1Arise Advance Ascend
  2. 2. 1. What and Why 2. Valuation 3. Quantum of fund 4. Structure 5. Exit 6. Exit Support 7. Protective/Participative Rights 8. Conclusion 2Transcend Excel Glorify
  3. 3. What is a term sheet ? • A statement of intent setting forth the basic terms and conditions under which a transaction will be effected • Non-binding agreement Why do we need a Term Sheet? • It is an evidence of conclusion of various parameters of the proposed transaction • It ensures that the parties are in agreement on the most crucial aspects of the deal • Forms the basis for developing more detailed legal documents that are binding 3Spur Stimulate Intensify 3
  4. 4. What is Valuation? • It is the estimation of the worth of your business How is it done ? • In stead of following the more scientific DCF method, till the growth stage as a thumb rule, the valuations are based on revenue or EBITDA multiples Why is it so crucial? • It is the key point of negotiation by the parties involved. • It determines the actual investment amount and the respective stake 4 4Emerge Swell Move Up
  5. 5. 5 5 Aggrandize Glorify Soar High
  6. 6. Company Preference Shares Investor’s Choice Equity Shares Entrepreneur's Choice 6 6Ascend Outshine Go Places
  7. 7. Why discussion on Exit now? How can an investor exit? • Promoters buyback • Company buyback • Strategic Sale • Initial Public Offering (IPO) 7 7 Stimulate Incite Stir Up Why does an investor need an exit at all ?
  8. 8. Rights that facilitate Exit Liquidation preference Right of First Offer Drag Along Rights Tag Along Rights Share Option 8 8 Arise Prevail Transcend
  9. 9. 9 Spur Stimulate Intensify 9 Protective Rights Board Governance Information Rights Budget Approvals Pre-emptive Rights
  10. 10. Arise Wake Up Rise Up 10 10
  11. 11. 1. Understand and assess the impact of the terms before you sign 2. Don’t negotiate hard but negotiate Smart 3. Take the advice of experienced consultants or entrepreneurs 11 11 Outshine Outstrip Outperform
  12. 12. Evolve Emerge Enlarge 12 12

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