Session 4 Case Study Questions

Term Sheet Negotiations for Trendsetter Inc.

What are some of the contextual elements of
Trendsetter Inc that you consider relevant for the
analysis of the two financing offers?

How do the term sheets compare? Hint Start by
structuring the comparison into topics:

Valuation

Liquidation and Antidilution

Corporate Governance

Vesting and Employment

Comparison and Renegotiation
Remember: at this juncture these term sheets are
proposals ... nothing is cast in stone.
2013 Viney Sawhney 1
Session 4 Case Study Questions
Term Sheet negotiations for Trendsetter Inc.

Valuation:

What is the amount to be invested?

What is the pre-money valuation for the case of
Mega?

How does the revenue performance hurdle
affect the pre-money valuation in the case of
Alpha?

How likely is it that Trendsetter will pass this
hurdle?

2013 Viney Sawhney 2

Session 4 Case Study Questions
Term Sheet negotiations for Trendsetter Inc.

Liquidation and Antidilution:

How do the term sheets differ in terms of
liquidiation preference for investors?

What types of secutities will be issued for
each?

How do the liquidation scenarios under Alpha
and Mega differ?

How do the antidilution provisions differ?

2013 Viney Sawhney 3

Session 4 Case Study Questions
Term Sheet negotiations for Trendsetter Inc.

Corporate Governance:

Compare all the governance terms (exclude
founders employment and termination)

How would you rank the critical issues?

Vesting and Employment:

How do the term sheets compare?

How would you rank the critical issues?

2013 Viney Sawhney 4

Session 4 Case Study Questions
Term Sheet negotiations for Trendsetter Inc.

Comparison and Renegotiation:

How do the term sheets compare?

How would you rank the critical issues?

International Comparison:

How is a term sheet different in other
countries?

What could be the reason for the differencs or
similarities?

2013 Viney Sawhney 5