The chat sheet is agnate to a letter of intent, that is, it is a nonbinding summary of the answer points of the transaction. These points are subsequent covered in detail in the Stock Purchase Agreement and related agreements signed at the age of execution of the transaction.
The amount of the abbreviated chat sheet format is that it speeds up the action of consummating a transaction. Specifically, it allows the parties to accede on the general terms of the transaction rather than having to debate less big details. In addition, as it is not binding, it allows the parties to booty their discussions to the abutting akin without the danger of committing too much. Note, however, that some parts of a chat sheet may be binding. Typically the binding aspects alone consult to confidentiality and disclosure issues.
Adventure chief firms, and not the companies seeking chief, typically prepare the chat sheet to accommodate the terms under which they are ready to invest their chief. Alternatively, when seeking chief from angel investors, firms typically actualize their own chat sheets for the angels to analysis. This actuality tells a bit about the balance of adeptness in an investment transaction. Adventure chief firms are generally added sophisticated and accept added adeptness than the companies seeking chief. Alternatively, angel investors are typically less sophisticated and accept less adeptness, and are added prone to accede the investment terms as laid out by the company seeking chief.
Getting to a chat sheet is a answer milestone in the chief raising action. Although not all chat sheets aftereffect in a transaction, the chat sheet shows that both parties are legitimately absorbed in executing a transaction. It is then up to the investor and company to accede upon the details.
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Originall posted April 28, 2012