E67: How to Evaluate a Term Sheet for Private Investments (3-Pillar Framework)

Most private investors don’t lose money because the asset was bad—they lose because the structure was flawed. In this episode of Alt Investing - - - - Made Easy, Sarah Florer and Roland Wiederaenders introduce a practical framework to help you evaluate a term sheet with clarity and confidence. You’ll learn how professional allocators think, why pitch decks aren’t enough, and how to assess a deal through three pillars: economics, control, and downside protection. If you want to reduce risk, spot misalignment early, and invest with intention, not emotion, this is your starting point.

Top Takeaways
-Most deals fail on structure, not the asset
The terms determine whether you win or lose—yet most investors never read them closely.
Pitch decks sell the dream; term sheets reveal the truth
A pitch deck is marketing. A term sheet is where protections, incentives, and alignment live.
Allocator mindset = framework-driven decision-making
Allocators invest with repeatable logic, not hype, headlines, or personality-driven conviction.
The 3-pillar term sheet framework simplifies diligence
Evaluate every deal through: Economics (returns + fees), Control (rights + governance), Downside Protection (loss prevention).
Downside protection is an investor’s real edge
Look for sponsor co-invest (“skin in the game”) and stress-tested scenarios that show how the deal performs when conditions worsen.

Notable Quotes
“Don’t be a speculator when you invest. You want to become an allocator.”
“Most private investments don’t fail because the assets were bad. They fail because the structure was broken from the start.”
“Pitch decks are marketing documents… ask for a term sheet.”
“Risk shouldn’t just stop with what the asset is… what’s the structural risk?”
“When the sponsor has skin in the game… they don’t want to lose their money either.”

Chapters (with timestamps)
00:19 — Welcome + “Don’t be a speculator—be an allocator”
00:49 — Why most investors react instead of allocate
01:18 — Term Sheet Teardown series: invest in structure, not the asset
01:29 — Deals fail because structure breaks (and investors don’t read it)
02:15 — What term sheets apply to (CRE, funds, PE, operating companies)
03:09 — Pitch decks vs. term sheets: what you’re missing
05:58 — The 3 pillars framework: economics, control, downside protection
08:56 — Pillar 1: Economics—what are you paid for the risk?
09:47 — Capital contribution vs. capital commitment (obligations matter)
10:39 — Preferred return: what it is and what it signals
12:18 — Profit splits, catch-ups, hurdles, and waterfall mechanics
14:01 — Fee stack + deal expenses: what reduces investor returns
15:16 — Pillar 2: Control—how governance really works
16:45 — Voting, reporting, removal rights, veto powers, succession planning
18:56 — Protective provisions + board rights (when control is appropriate)
21:04 — Pillar 3: Downside protection—what happens when things go wrong?
22:12 — Sponsor co-invest: “skin in the game” as a risk filter
23:43 — Sensitivity analysis + stress testing: signs of a serious sponsor
25:53 — How to get the free Term Sheet Teardown ebook (subscriber offer)
27:09 — Why they’re doing it: tools for serious allocators
27:53 — Final recap + subscribe reminder

Credits
Sponsored by Real Advisers Capital, Austin, Texas
If you are interested in being a guest, please email us.

Podcast Production by Red Sun Creative, Austin, TX: https://redsuncreative.studio/

Disclaimers
“This production is for educational purposes only and is not intended as investment or legal advice.”

“The hosts of this podcast practice law with the law firm, Ferguson Braswell Fraser Kubasta PC; however, the views expressed on this podcast are solely those of the hosts and their guests, and not those of Ferguson Braswell Fraser Kubasta PC.”

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