When an investor likes your investment proposal and the follow-up meetings
have been fruitful, you may receive a "term sheet" that outlines
an offer from the investor. Keep in mind that this offer is the investor's
opening position — now you've got to negotiate an agreement that
both parties can live with. In some cases, negotiations are painstaking,
lengthy and stressful for both parties. But some advanced thinking and
effective planning can help negotiations proceed more smoothly.
In This Step
You'll learn how to do some important advance preparation before
negotiations take place. You will also consider how to handle
a negotiation session most effectively so as to achieve a win-win
outcome and avoid some common negotiation pitfalls. Step 7 will
also help you decide when and how to disclose your price and
point out the key elements of the term sheet and the shareholder
agreement. The key concepts are explored in the pages that follow.
If you need a deeper understanding of the material, be sure to follow the
links within each section.
The New Tech Story
Follow the fictional company
New Tech Distributors Corp. (New Tech) as it pursues venture financing.
This case example gives you a feeling for the "real" data and
strategic decisions you'll be facing. You can always get to it through the
link on the left menu bar.
