Is a Signed Term Sheet Binding, and Can I Walk Away if an Acquirer Calls?

What a term sheet usually binds

Most of a venture term sheet is a statement of intent. Price, round size, board seats and the other economics stay open until the definitive documents are signed. A few clauses are commonly written to bind from day one:

• Confidentiality: you cannot share the terms or the investor's name without consent.
• Exclusivity, also called a no-shop: you agree not to solicit other offers for a set number of weeks.
• Costs: who pays the lawyers if the deal dies.

Your document may differ, so read the section that says which clauses are binding. If it does not say, ask.

A recent public example

In early September 2026, TechCrunch reported that Listen Labs, an AI customer research company, had signed a term sheet for a $125 million Series C at a $1.5 billion valuation, led by Menlo Ventures. The round never closed. TechCrunch's sources said it likely collapsed because of acquisition talks with Salesforce, and that VCs described walking away from a signed term sheet as rare and generally frowned upon. In January the company had been valued at $500 million on a $69 million Series B.

On September 29, Salesforce announced a definitive agreement to buy Listen Labs. Salesforce did not disclose the price. Business Insider had earlier reported talks at around $2 billion.

That is one company's outcome, not a pattern. It shows the choice exists. It does not show that walking is wise or free.

What walking away can cost

• If a no-shop is still running, taking an acquirer's call may breach it.
• Investors talk. A founder who walks from a signed term sheet can find the next round harder to price.
• A buyer's interest is not an offer until it is in writing with a price and a structure.

Questions to answer before you take the call

• Is there a no-shop, and when does it expire?
• Does the term sheet carry a break fee or cost reimbursement?
• Is the acquirer's interest a written letter of intent, or a conversation?
• Has this buyer closed deals like yours, and how did they pay?
• After earnout, escrow and tax, is the acquisition price clearly better than the round?

Your situation

If you have a signed term sheet and a buyer has called, do not answer in either direction yet. Read the binding clauses, get the buyer's interest in writing, then compare the two on what you would actually receive. This is general information, not legal advice.

Related reading: How long should exclusivity last in an LOI, and what can I negotiate once I have signed one; What is a letter of intent (LOI) in M&A; I got an unsolicited offer to buy my company. What should I do first; When should a startup founder choose to raise venture capital funding versus sell their company; What is a strategic buyer and how do I find one for my startup; How should founders structure an earnout in an acquisition deal.