It's not even binding (and other myths)
In many large transactions like a business sale, the letter of intent or a term sheet is a non-binding first step to start negotiations. It includes things like price, payment terms and other key terms of the deal.
But just because it’s non-binding, doesn’t mean it’s not important.
In fact, it’s probably the most important legal document of the whole deal because it’s a psychological anchor for the rest of the process. Any major changes introduced after that could kill the deal. Plus, a well-drafted term sheet will make the final agreement much easier and faster to finalize.
Plus, parts of it actually are binding, like the exclusivity and confidentiality requirements. This only makes it even more important.
When my client Heather was selling her medical supply business, she tried working on the term sheet herself at first, but then brought me in when she realized how complex it was.
I was able to get her much more favorable payment and price adjustment terms. I also added several provisions that she would not even have known to ask for. After that, the final contract was much easier to negotiate.
If you just got a formal offer to buy your software company, consider this: how many businesses have you sold? This is not the time to go it alone.