Term Sheet Manners
Although the title of this post is "Term Sheet Manners", what I am going to write about can be applied to all legal documents, not just term sheets.
The past couple days, I've been going back and forth with one of our lawyers on a deal we are working on. We've decided to suggest some changes to the deal and the lawyers are marking up the documents to show the changes.
We could simply send the marked up document back and say "these are the changes we are looking for". I've taken that approach in the past and it's not ideal. Usually, the recipient gets ticked off and you end up spending a lot of time and energy getting things back on track.
The better approach is to compile a list of the big changes you are looking for and call the recipient and walk them through the things you need changed. It's even better if you can do that face to face, although I wouldn't suggest getting on a plane to do this unless the deal is super important and very material to your company.
There are three primary reasons I've learned (the hard way) that a live discussion is the best way to suggest changes to a deal:
1) It shows respect for the other side. Instructing a lawyer to mark up a document and send it back is a slap in the face and most people get very upset by it if the changes are material.
2) Discussing deal terms principal to principal is so much easier than working through lawyers. I've gotten way more done this way.
3) Many times, there is a misunderstanding of the deal terms being discussed that documents and lawyers can't break through. A conversation can usually resolve these kinds of misunderstandings quickly.
So I suggest that we should all resist the temptation to convey material changes via the exchange of markups. At best, it saves you a twenty minute conversation, at worst it can easily cost you a deal.