Compare Term Sheet Against Stock Purchase Agreement

---
name: ecvc-compare-term-sheet-against-spa
task_id: emerging-companies-venture-capital/compare-term-sheet-against-stock-purchase-agreement
description: Term-sheet-to-agreement comparison requires classifying each deviation by type and affected party, reading defined-term exceptions that may embed substantive changes, and assessing cumulative dilution impact rather than merely listing differences.
activates_for: [planner, solver, checker]
---

# Skill: Compare Term Sheet Against Stock Purchase Agreement

## 2. Failure modes the skill is correcting

- Deviations are identified but not ranked by severity, so the report fails to separate economic drift from drafting cleanup.
- Differences are noted without stating which side is harmed or whether the company, preferred holders, founders, or common holders bear the downside.
- Defined terms are read mechanically; substantive changes hidden in definitions, exceptions, or cross-references are missed.
- Multiple carve-outs and exceptions are analyzed in isolation, so the combined economic effect is understated.
- The report describes the gap but stops short of explaining how the gap interacts with the rest of the SPA or what it means for closing, dilution, control, or exit economics.

## 3. Legal frameworks / domain conventions that apply

- Treat the term sheet as the benchmark for the agreed commercial deal and the SPA as the operative document to test against that benchmark.
- Classify each gap by type: economic deviation, control deviation, drafting addition, omission, or conforming clarification.
- Read defined terms, schedules, exhibits, and exceptions with the same care as operative clauses, because substantive changes are often embedded there.
- For pricing and dilution mechanics, compare the operative formula, inputs, exceptions, and any issuer-side or third-party carve-outs against the stated deal intent.
- For preference, participation, conversion, consent, voting, drag, and protective provisions, test both the trigger mechanics and any embedded exceptions.
- Any deviation that changes the exit waterfall or conversion economics is treated as more serious than a pure drafting clarification.
- Any deviation that shifts bargaining power, veto rights, or closing discretion away from the agreed term sheet position is a control issue, even if the language appears technical.
- If the SPA adds obligations, approvals, conditions, or covenants not reflected in the term sheet, flag the addition even if it is arguably customary.
- If the SPA is silent on a point addressed in the term sheet, treat silence as a potential omission unless the surrounding text clearly preserves the deal point.

## 4. Analytical scaffolds

- Start by enumerating every term-sheet deal point as a numbered checklist before reading the SPA.
- For each checklist item, determine whether the SPA conforms, deviates, adds language, omits language, or merely clarifies.
- For each issue, state:
  - the term-sheet position,
  - the SPA position,
  - the deviation type,
  - the severity,
  - the party harmed,
  - the downstream consequence,
  - the interaction with any other clause, schedule, or definition that changes the practical effect.
- Read the SPA in two passes: first for operative provisions, then for definitions, exclusions, schedules, and exhibits that may alter the operative result.
- Where a provision uses a formula or exception structure, check the base rule and every carve-out together before concluding it matches.
- Where the same concept appears in multiple places, reconcile all instances and identify whether the SPA is internally consistent or whether one clause undercuts another.
- Assess cumulative effect across multiple deviations, especially where several small exceptions jointly erode the agreed economics or protection package.
- For every Critical or High issue, include a short response framing that explains why the deviation matters in negotiation terms, not just in drafting terms.

## 5. Vertical / structural / temporal relationships

- Compare the deal from term sheet to SPA in document order, but do not assume later clauses are merely mechanical if they alter economics or control.
- Give priority to provisions that govern economics, voting, transfer, liquidation, dilution, and closing conditions before lower-order housekeeping language.
- Track vertical relationships among definitions, substantive clauses, schedules, exhibits, and signature mechanics; a harmless-looking definition can control a later operative section.
- Check temporal sequencing where timing affects rights or obligations, including pre-closing conditions, closing deliverables, post-closing covenants, and any survival or deferred-action mechanics.
- When a clause depends on another document or future event, test whether the dependency narrows, expands, or conditions the agreed term-sheet right.

## 6. Output structure conventions

- Produce a deviation report, not a redline, with a brief executive summary followed by a structured issue table.
- Open with a severity legend using a fixed ordinal scale: Critical, High, Medium, Low.
- Organize the main table by severity, then by topic, so the most consequential deviations appear first.
- Use columns that make the comparison explicit: provision, term-sheet position, SPA position, deviation type, severity, party harmed, consequence, related clause or definition.
- Include separate narrative analysis for each Critical and High deviation, with the practical reason the issue matters and the negotiation posture it suggests.
- Call out defined-term changes, exceptions, and cross-references in the same way as direct operative deviations; do not bury them in a separate “miscellaneous” bucket.
- Add a cumulative-effect section that synthesizes how multiple carve-outs, omissions, or additions change the overall economic or control package.
- End with a concise Recommended Actions block that assigns each action to the relevant deal role and ties it to the signing or closing milestone.
- Use conventional legal drafting language; avoid internal rubric labels and avoid suggesting that a difference is immaterial unless the comparison supports that conclusion.