Document background
A Term Sheet For Sale of Business is a crucial preliminary document used in German M&A transactions to establish the framework for business sale negotiations. It is typically prepared after initial discussions between parties but before detailed due diligence and final agreement drafting. The document captures key commercial terms, conditions, and transaction structure while considering specific requirements of German law, such as merger control thresholds, works council consultation requirements, and corporate approval processes. It serves multiple purposes: documenting preliminary agreement on key terms, providing a blueprint for due diligence, and guiding the preparation of definitive agreements. While predominantly non-binding, certain provisions such as confidentiality, exclusivity, and governing law are typically binding. The term sheet's scope and complexity often reflect the transaction size and complexity, ranging from straightforward share purchases to complex carve-out transactions.
