Self-funded deal investor term sheet?

April 19, 2023

by a searcher from Duke University - The Fuqua School of Business in Chicago, IL, USA

Hi folks,

We're in the process of executing a self-funded search. As a self-funded duo - we're hoping to retain as much equity as possible in our future target. We've begun talking to a number of potential equity investors (of different profiles). We've sketched out the broad strokes of what an equity investment may look like when we have a deal in our focus industry (independent insurance agencies) but looking to get a more structured document together- specifically we intend to issue shares of preferred stock with PIK coupons, along with matching common stock to get to an all-in IRR target of 30%. Does this group have any standard templates for investor term sheets for self-funded deals along these lines? Any help would be appreciated. Thanks!

Reply by a professional
from Villanova University in West Chester, PA, USA

Hi ^redacted‌, hope you're doing well! We can help with this if you'd like. I would echo ^redacted‌ that this is typically drafted by an attorney to ultimately mirror your prospective investment vehicle governance documents.

Reply by a professional
from Dartmouth College in Los Angeles, CA, USA

Hi Aaron, what your are looking for is a term sheet with participating preferred, of which you should be able to find some templates easily. But I wouldn't necessarily recommend trying to DIY this, especially if you are dealing with sophisticated investors.

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