Financing Term Sheet Deep Dive: An Overview

Whether you’ve only recently decided to seek out capital for your business or have already received (or made) your first offer, the term sheet (or “letter of intent”) is an integral part of the process.  In this series we’ll look to shed some light on the legal language contained in a financing term sheet by taking a “deep dive” into the most often used terms and how choices made in selecting those terms can affect both the Company and the Investor.  

Financing Term Sheet Deep Dive will be published each Monday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

***

One of the primary times that a client will seek out my advice is when they are faced with reviewing (or drafting) a term sheet for the sale (or purchase) of a company’s stock. For those who have not gone through the process, the notion of a term sheet (a document that lays out the basics of a proposed transaction but not in sufficient detail to actually effect the sale) can seem a little odd or even antiquated.  What good is a document that expressly states that it is “non-binding”, after all?

The easiest answer, like many things in the law, is that offering a term sheet before drafting definitive documents is simply the way things are done.  But, while true, that answer is not only pat (and somewhat unhelpful), it is also incomplete.

Microsoft to Buy Bungie? When is a Denial Not Really a Denial? (VL314)

Is Bungie in talks to sell out to Microsoft? Have such talks *ever* happened? Imran Khan of Kinda Funny, Jeff Grubb of GamesBeat, and Tom Phillips of Eurogamer sure think so. But why then did the CEO of Bungie, Pete Parsons, deliver a flat denial on Twitter stating in no uncertain terms that “This is False”?

Well like most things in corporate messaging, there’s more here than initially meets the eye.

When is a denial not a denial? When it categorically denies a multi-conditional paraphrase of a rumor speculated on in a casual podcast by two separate people.

CEOs don’t wear halos, but their destiny *is* to parse language…in Virtual Legality.

The Rise of Reylo: The Toxic Heart of Disney’s Star Wars

INTRODUCTION

Disney’s Star Wars Sequel Trilogy. Episodes 7, 8, and 9. The Force Awakens, The Last Jedi, and The Rise of Skywalker will go down as one of the most lucrative filmic trios ever made.  After buying the brand (along with the rest of Lucasfilm) in 2012 for a mere $4 billion US dollars, Disney immediately lurched into action, determined to churn out profit through the creation of a full three-film addition to the Star Wars “saga” by the end of the decade. 

But where The Force Awakens and its gross returns of more than $2 billion dollars only three years after the purchase suggested clear skies and smooth sailing for the franchise, Lucasfilm under Disney would soon find itself desperately searching for any port in the storm: The Last Jedi would be released to $700 million less than Force Awakens – Solo, another billion less than that. 

Correction was needed, and correction (of a sort) would be found in 2019’s The Rise of Skywalker, the end of what Disney would eventually call “The Skywalker Saga”.

But where the path to the dark side is quick, easy, and sometimes even successful, it is also corrupting, and with The Rise of Skywalker, Disney would eventually sell the soul of Star Wars…for a kiss. 

Virtual Legality #47 – Gizmodo Group Sold! What is “Private Equity” Anyway?

With the sale of the Gizmodo Group, some of the Internet’s favorite “blog-style” journalistic hot spots are now in the hands of a little known private equity firm. But if the firm itself is little known, what the sale actually means (or could mean) is even less understood.

What is “private equity”? How does it work? How are funds formed? And how does corporate law and tax regulation inform their creation?

What does this mean for Kotaku, Gizmodo, Jezebel, Deadspin, The Onion, and the rest of the acquisition group?

And why might it not be the doom that some fear, when other private equity targets (such as Toys R Us) fell to bankruptcy shortly after their acquisition?

---