Clearly SoftBanks is having its challenges but this just sounds like normal deals falling apart during pre-closing due diligence. You don’t have a deal till you have a deal.
Another good example of a firm that is notoriously dishonest about term sheets is Global Founders Capital (the rocket internet people). They are known to blow out rival firms offers financially and then after everyone is out, come back and try to renegotiate at more onerous terms.
1. Some people that have real-world experience with raising money and term sheets. They understand what the norms and expectations are in addition to understanding the legal aspects.
2. Other people that lack the real-world experience and are just speculating without understanding the norms. They are only referring to the legal aspects.
You can use all the tools of the law to disadvantage others but word will get around that you're a dirty dealer and it'll be their privilege to not do business with you anymore.
I now treat VC as a funny form of enterprise sales, and this happens there too. Want a 6/7/8 figure deal? Same thing: has the group bought stuff at that level before, if so, what is the process? And, the more critical the deal, the more imp. you talk to folks who also recently ran the gauntlet.
From experience its a very small marketplace (esp with big checks). So there is a very high expectation that people act with longterm consideration of one another and subsequently their reputation. Just disappearing, or changing terms without a material change is dishonest period.
The two firms are essentially dictatorships masquerading as firms. What you get is a bunch of definitionally impotent lieutenants who go make deals and carry them to the 1 yard line and then the boss (Masayoshi or oliver) decide again as if nothing had happened before whether or not to execute.
Unless the bosses are the ones leading the deal, know that you there is zero good faith and a lot of risk as far as outcome goes.
I think a term sheet is also just an invitation, not a binding offer.
Solicitors get paid for work done until that point regardless, and I doubt sellers have that information when deciding whether to accept an offer, and they are who makes the choice to accept.
Sellers also pull out frequently - had that happen to me a few times. It's frustrating but it happens.
The above not very precise as I am not involved in it and not especially interested. But the detail stuck with me as one of those other cultures are strange things.
That also allows the buyer to get out for any reason within the financing contingency window (by just not complying with all the ridiculous paperwork demands from the lender, "oops, sorry, mortgage didn't end up coming through")
But taking months to close a deal seems absurd.
Industry standards are though that once the term sheet is signed, the deal is 99% sure to happen, unless there are serious problems discovered in due diligence.
BTW, a term sheet is usually very specific about it being for discussion purposes only.
However, 6 months instead of 30-45 days without a useful fee for non-execution sounds like the company wasn't in a good place to begin with.
But the exclusivity period is typically 30-45 days. There would have needed to be some particular reason for six months, given how far off-market it is.
It's not a deal until the check clears. I've seen real estate and business deals fail at the very, very last moment. Sometimes people do amazing things at the last second.
You trust venture capitalists to care about people more than money? I'm genuinely asking, as I cannot fathom that worldview.