Do You Actually Negotiate Your Term Sheets?

[Jonathan Bombaci]

I recently realized something interesting. Even some very sophisticated and experienced investors I know don’t really review or negotiate their term sheets beyond the interest rate.

That surprised me. There are so many details in those documents that can dramatically change the economics of a deal — reserve requirements, prepayment penalties, draw schedules, recourse language, timelines, extension options, and so on.

It’s easy to get caught up in the rate, but the devil is definitely in the details.

I’m curious — do you negotiate your term sheets?

If so, where have you found the most success? And for those who don’t, is it because you trust your lender, don’t feel like you have leverage, or just haven’t dug into it before?