Also known as: Terms Sheet
A Term Sheet is a structured summary of the proposed commercial and legal terms of a partnership, used as the working document during negotiation. It lays out the payout structure, tiers, exclusivity, term length and termination conditions in a scannable format.
A Term Sheet is the working document of a negotiated partnership. Unlike a quick deal memo, it is organised into clear sections: the payout structure and tiers, any override for sub-partners, exclusivity, the term length, and termination and post-termination conditions. Its scannable format lets both sides mark up and counter each clause.
For a master IB negotiating a custom regional deal, the real value is captured here. Winning 60% revenue share instead of 55%, adding a lifetime-revenue tail, or softening a clawback window is far easier on the term sheet than after the MSA is executed. Most clauses stay non-binding until the contract is signed, but confidentiality and exclusivity provisions are often explicitly marked binding so negotiations can proceed safely.
The broker sends a term sheet with proposed tiers, exclusivity and term.
Assess payout, override, termination and post-termination revenue, not just the headline rate.
Push on tier, clawback window, sub-IB override and exclusivity carve-outs.
Exchange revised versions until both sides accept the terms.
The agreed term sheet becomes the blueprint for the binding contract.
Why it matters for partnership: For master IBs and larger partners negotiating custom deals, the Term Sheet is where the real bargaining happens. Getting a higher tier, a longer lifetime-revenue tail or softer clawback terms is won or lost here, before either side commits to the final contract.
A master IB negotiating a regional deal receives a Term Sheet offering 55% revenue share plus a sub-IB override. They counter for 60% and a 12-month exclusivity carve-out; the revised Term Sheet becomes the blueprint for the MSA.
| Document | Stage | Binding |
|---|---|---|
| Deal Memo | Right after the handshake | Usually no |
| Term Sheet | During negotiation | Mostly no; some clauses yes |
| MSA | Final relationship contract | Yes |
Negotiate the clawback window and the sub-partner override on the Term Sheet, not after signing. These are far harder to change once they are in the executed contract.
Focusing only on the headline commission rate and ignoring termination, exclusivity and post-termination revenue clauses, which decide the deal's real long-term value.
Usually it is non-binding except for specific clauses like confidentiality and exclusivity, which are often marked as binding.