What is typically included in a term sheet?

A term sheet is a non-binding document that lays out the general terms and conditions of a financing deal before it is finalized. Option B, which refers to indicative terms for transaction commitments, is a fundamental component of a term sheet. It includes key details such as the amount of financing, interest rates, maturities, and any covenants or conditions that may apply to the transaction. This information serves as a framework for both parties to understand the essential terms of the deal before moving forward with detailed negotiations or drafting formal agreements.

While payment schedules for interest and principal, a list of potential investors, and risk assessment details are important in investment and financing discussions, they are not typically the central focus of a term sheet. Payment schedules may be part of the final loan agreement but are usually more detailed and specific than what is generally included in the preliminary terms. A list of potential investors may come into play during fundraising or marketing of the securities but is not a standard feature of a term sheet itself. Similarly, risk assessments are more likely to be addressed in due diligence materials or official offering documents rather than in the term sheet, which is primarily focused on the high-level terms of the transaction.