Deal Structuring, Term Sheets, and Deal Terms

Mohammad Mustafa ()
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Mohammad Mustafa: Ex-CMD Small Industries Development Bank of India

Chapter Chapter 6 in Angel Investing, 2021, pp 165-204 from Springer

Abstract: Abstract A well-structured deal can create value for the entrepreneur and provide angel investors with a return that compensates for the risk. In this chapter, we discuss points of negotiation between them, that is, the contractual rights and obligations between angel investors and entrepreneurs and the financial contracts beneficial for both the parties. There are number of rights and obligations that can be incorporated in a term sheet depending upon the negotiating power of the angel investor, stage of the company, and existing capital structure of a company. Ideally, angel investors would only be able to generate returns if the company is successful. At that point, mostly economic and exit rights would matter for an angel investor. If a company is not going to become a large outcome, they will not be able to derive much value by any rights.

Keywords: Deal terms; Term sheets; Deal negotiation; Rights; Deal closure; Liquidation Preference (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-0921-3_6

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DOI: 10.1007/978-981-16-0921-3_6

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