We signed an LOI with a forty-five-day exclusivity window, but the buyer's lawyers are dragging their feet on the purchase agreement and asking for an extension while our business is locked up. How do we structure a hard-stop expiration or a daily extension fee to force them to the closing table?

Question

Tyler Smith · Accepted Answer

Once you sign an LOI with an exclusivity clause, the balance of power shifts completely to the buyer. They know you are locked up and cannot talk to other suitors, which tempts them to drag their feet to wear you down or find excuses to renegotiate the purchase price. When they ask for an extension, do not grant it for free. You must renegotiate the terms using three specific levers:
- Demand a non-refundable exclusivity extension fee paid directly to you, outside of escrow.
- Require a clean draft of the purchase agreement and all ancillary documents before signing.
- Use the Trust Equation to identify the bottleneck by asking for their internal closing checklist.
A fee of five thousand dollars per day of extension quickly focuses the buyer's attention on closing the deal. Additionally, requiring them to submit a clean draft of the purchase agreement and all ancillary documents before you sign any extension forces their legal team to prioritize your transaction over others. Finally, leverage the Trust Equation by reducing your self-orientation and focusing on their reliability. Ask them to share their internal closing checklist and explain the specific bottleneck delaying their team. If they cannot provide a clear, reasonable explanation, they may be trying to stall until your quarterly numbers slip. Stand firm, and be prepared to let the exclusivity expire to regain your leverage.