Our signed LOI granted a sixty-day exclusivity window, but the buyer's counsel is dragging out diligence and asking for an extension while our operations are getting strained. How do we structure exclusivity deadlines and milestone gates to force a closing without blowing up the deal?

Question

Tyler Smith · Accepted Answer

Exclusivity is the buyer's greatest weapon because it strips away your competitive tension. The moment an LOI is signed, the balance of power shifts to the acquirer. If their diligence team drags past day fifty while demanding an extension, deal fatigue sets in, operations suffer, and a price re-trade inevitably follows.

Never grant a blank-check exclusivity extension. In your initial LOI, build in milestone-gated exclusivity rather than an arbitrary calendar duration. Tie the initial forty-five-day exclusivity period to concrete deliverables:

- Completion and delivery of the third-party QoE draft by day twenty-five.
- Delivery of initial definitive transaction documents by day thirty-five.
- Submission of final debt financing commitment letters by day forty-five.

If the buyer fails to meet a milestone gate, exclusivity expires automatically unless they provide additional consideration. If they ask for an extension at day sixty without cause, demand a non-refundable ticking fee or a meaningful increase in escrowed earnest money that releases to you if the deal fails to close.

Alternatively, convert the arrangement to non-exclusive status. This grants them the right to finish documentation while giving you the legal freedom to re-engage backup bidders if definitive documents are not executed within ten business days.

Keep your leadership team focused on quarterly Rocks and the weekly Level 10 Meeting rhythm. The greatest antidote to buyer delay is hitting or exceeding your Scorecard numbers during diligence, proving that the business continues growing whether they close or walk.