I am amazed at the number of privately held business partnerships that do not have a formal buy-sell agreement in place. This one is absolutely essential. When forming your business, you chose your partner; make sure you have some rights when it comes to who your partner will be as time goes on too.

The capitalization table (cap table) summarizes who owns what part of the company before and after financing. It is one of the most important elements of the term sheet because it outlines the complete transaction succinctly using concrete numbers.