A prospective buyer insists on a ninety-day exclusivity clause with no breakup fee in the LOI, but our team worries about broken deal risk. What exclusivity terms and operational milestones should we demand?

Question

Tyler Smith · Accepted Answer

Ninety days of unrestricted exclusivity tilts all leverage to the buyer. Once you sign that no-shop provision, you lose the ability to negotiate with competing bidders, and the buyer knows you are economically committed. An aggressive acquirer will often take their time, run slow diligence, and then attempt to reprice the transaction on day seventy-five when they know you are deal-fatigued.

Never grant a blank ninety-day window. Instead, negotiate a milestone-based exclusivity framework. Offer an initial exclusivity period of forty-five days, which provides ample time for the buyer to complete their primary Quality of Earnings analysis and confirm commercial viability. Require specific written deliverables to earn subsequent fifteen-day extensions.

For example, grant a fifteen-day extension only if the buyer delivers a satisfactory sell-side QoE confirmation and issues first drafts of definitive legal documents. Grant an additional final extension only when debt financing commitments are secured. If the buyer fails to hit these operational checkpoints, exclusivity automatically expires, restoring your leverage to re-engage with backup bidders.

Additionally, introduce an automatic termination clause if the buyer attempts to reprice the enterprise value downward without a proven accounting error. Protect your leadership team's time by tracking these diligence deadlines on your executive Scorecard. Maintain strict control over the deal calendar, because momentum is the single biggest factor in successfully closing an M&A transaction.