Announcing the first term sheet builder for transferable tax credit transactions

Transferable tax credits have spurred billions of dollars of investment into domestic energy and manufacturing projects — analysis from the American Clean Power Association finds that transferable tax credits will catalyze $2.0 trillion in capital investments. Despite this impact, many tax credit transfers are slowed down by the process of getting to a signed term sheet. 

Today, that process begins with one party taking responsibility for drafting the term sheet. They will start with their form and populate dozens of counterparty-, transaction-, and credit-specific terms, which the other party then reviews. Market participants regularly tell us about first drafts that contain off-market terms that favor the drafting party, substantive negotiations occurring through redlines, and lots of manual work. The results? More time, costs, and work to close deals.

Advisors echo these pain points. In a survey of leading law firms, tax advisory firms, insurers, financial institutions, and syndicators, 51% of respondents told us that more standardization is a key driver of a smooth transaction.

Seeing the delays and costs the current process presents to all transacting parties, Crux has developed the first term sheet builder for transferable tax credit deals.

Introducing the Term Sheet Builder

The Term Sheet Builder comprises three key features:

• Crux’s form term sheet: We have developed a neutral form term sheet that contains options for key terms based on Crux’s market-leading data and input from leading law firms and market participants. This is the starting point of the final, customized term sheet. 
• Key issue questionnaire: Counterparties and their advisors can quickly provide input on 25 of the most commonly negotiated terms, spanning credit support, economic terms, and legal requirements. 
• Auto population: The Term Sheet Builder combines both parties’ responses to the key issue questionnaire with credit and counterparty information from the Crux platform to instantaneously populate a draft term sheet.

Want to be an early user of upcoming platform features? Reach out to partnerships@cruxclimate.com. 

This term sheet serves as a starting point for further conversations between tax credit sellers, buyers, and their respective counsels. It is based on the most prevalent terms in the market as well as feedback from leading law firms and other intermediaries, and provides all parties with greater:

• Efficiency: By answering questions about key deal terms in the first draft, buyers and sellers can align on key deal terms earlier and reach an executed term sheet faster.
• Flexibility: The term sheet provides multiple terms that are prevalent in the market so that buyers and sellers can discuss them with their legal teams. Everyone has the visibility and market intelligence to determine which term options make the most sense for them.
• Comprehensiveness: The pre-populated term sheets cover all the details that require alignment early in the process, reducing the need for redlines. 
• Transparency and standardization: The Term Sheet Builder includes options for commercial points that are informed by Crux’s market intelligence and market-validated standards. 

Based on deep understanding of different market positions

The Term Sheet builder, like the Cruxtimate and the Transaction Hub, is part of Crux’s work to make the transferable tax credit market more liquid, efficient, and intelligent. Since the Term Sheet Builder launched in beta earlier this year, we have seen numerous deals reach a signed term sheet in one or two iterations.

All of Crux’s platform tools are informed by our deep visibility into the market. Crux’s transferable tax credit marketplace brings together the largest network of developers and manufacturers, tax credit buyers and advisors, and intermediaries. Our insights and market standardization are informed by a dataset of more than $30 billion in tax credit transactions. 

We’ll continue to invest in and refine the Term Sheet Builder, including integrating more market-leading intelligence, creating more versions for different types of transactions, and expanding to debt transactions. 

If you’ve used the Term Sheet Builder and want to share feedback, please reach out. To learn more and start transacting on Crux’s tax credit marketplace, contact us.