Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#1

Post by funding » Fri, Jun 25, 2010, 7:39 PM UTC

We received a very straight forward term sheet which we completely agree upon. However, after signing the term sheet we received 100+ page legal document. What should we do?

1. Engage a law firm which will take time. 2. Try to find someone who has hands-on experience 3. Read it ourselves and figure it out. 4. ???

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#2

Post by iamdave » Fri, Jun 25, 2010, 8:29 PM UTC

1.

Better to take your time than to take your money.

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#3

Post by superk » Fri, Jun 25, 2010, 8:30 PM UTC

Honestly, I would hand it back and ask them to reduce it to less than 10 pages. There's nothing to be intimidated about legal documents in general (reading through them you can make any changes before signing) but 100 pages just isn't fair in a business relationship.

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#4

Post by superk » Fri, Jun 25, 2010, 8:31 PM UTC

iamdave wrote: post #2

1. Better to take your time than to take your money.

Engage a law firm will take your time and your money.

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#5

Post by snorkel » Fri, Jun 25, 2010, 8:39 PM UTC

Sit on it and say "we're reviewing it" and in the meantime keep the other party interested and excited, then tell them after reviewing it that you've been advised that it needs to be reduced.

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#6

Post by hristov » Fri, Jun 25, 2010, 8:45 PM UTC

Depends how much money the investment is for. If it is for 100K or more, I would have a lawyer look at it. You do not need to hire a large expensive firm, and a good lawyer should be able to stay within reasonable cost constraints (just make sure you negotiate an acceptable cost estimate before you start work).

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#7

Post by funding » Fri, Jun 25, 2010, 8:51 PM UTC

superk wrote: post #3

Honestly, I would hand it back and ask them to reduce it to less than 10 pages. There's nothing to be intimidated about legal documents in general (reading through them you can make any changes before signing) but 100 pages just isn't fair in a business relationship.

Their logic behind it is the efforts of raising subsequent rounds will be highly reduced with not much changes in the documentation.

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#8

Post by funding » Fri, Jun 25, 2010, 8:52 PM UTC

hristov wrote: post #6

Depends how much money the investment is for. If it is for 100K or more, I would have a lawyer look at it. You do not need to hire a large expensive firm, and a good lawyer should be able to stay within reasonable cost constraints (just make sure you negotiate an acceptable cost estimate before you start work).

any suggestions for new york area?

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#9

Post by petervandijck » Fri, Jun 25, 2010, 9:03 PM UTC

Do you trust them? Do they have a reputation to protect?

Re: Ask HN: 2 page simple term sheet and 100+ page contracts. What to do?

#10

Post by funding » Fri, Jun 25, 2010, 9:06 PM UTC

petervandijck wrote: post #9

Do you trust them? Do they have a reputation to protect?

A lot. They have a huge reputation.