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

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

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

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