6 Things to Consider in Structuring a Term Sheet for IB

Few months in as an IB analyst and we're a boutique IB specializing in DCM and mezzanine financing.

What are the things you consider in structuring a term sheet? Please note that we're not based in the US and hence the terms and/or practices might slightly differ from Wall Street & EU IBs.

Here's what I've thought of so far:

1. Type of Preferred Share

• How would you determine which is the best type of preferred share (i.e. callable vs non-callable, cumulative vs non-cumulative) for a company to issue?
• What corporate strategic, financial, and market considerations do you take into account?

2. Dividend rate (Preferred Shares)

• Consider the company is prime company or not (higher rate for lower quality companies, similar to credit ratings).
• Could be a fixed rate or based on a risk-free bench mark (i.e. 10-yr Treasury) plus several basis points (i.e. 100-300 bps).

3. Interest rate (Bonds)

How do you determine the ideal interest rate for a bond offering taking into account market considerations as well as company credit-rating?

4. Redemption Clause

What strategic and financial considerations do you take into account for a redemption clause?

5. Offer Size

it would obviously depend on the financial position and leverage of the company, but what other specific considerations?

6. Underwriting Fee

How much would you charge?