We just signed our Letter of Intent, and the buyer is demanding a sixty-day exclusivity window, but we are worried they will stall and chip away at our valuation. How do we structure this phase to maintain our leverage and close on time?

Question

Tyler Smith · Accepted Answer

When a buyer demands an exclusivity window, it's a significant concession. You must ensure you receive concrete, binding operational commitments in return. To prevent the buyer from stalling the process and eroding your valuation, structure the exclusivity period with strict, weekly milestones.

Structuring the Exclusivity Period

Integrate these milestones directly into the Letter of Intent (LOI). This ensures that maintaining exclusivity is conditional on the buyer's progress.

Define Diligence Phases and Milestones

Divide the due diligence process into clear, manageable phases:

• Financial diligence (e.g., Quality of Earnings)
• Legal diligence
• Insurance diligence
• Operational diligence

For each phase, specify hard deadlines. For example:

• If the buyer does not complete their Quality of Earnings fieldwork by day twenty, exclusivity should automatically terminate.
• If they fail to deliver the first draft of the purchase agreement by day thirty-five, the exclusivity period should likewise end.

Maintain Internal Discipline

Just as you would track your [quarterly Rocks](/qa/fixing-boring-eos-quarterly-sessions), use your weekly leadership meetings to review these deal milestones. If the buyer begins to lag, address it immediately.

It is crucial to maintain operational discipline during this sensitive period. Do not allow your leadership team to become distracted by the deal. If your business performance dips during diligence, the buyer will likely use it as an excuse to renegotiate the multiple. Keep your [Scorecard](/qa/how-to-choose-five-fifteen-scorecard-metrics) updated and continue to run your operations with the same intensity as always.

Make it clear to the buyer that your business operates on a proven operating system. If they observe strong operations and disciplined tracking of their diligence progress, they will be less inclined to attempt late-stage renegotiation tactics. This can also help you identify [hidden risks in your business operations](/qa/identifying-operational-risks-before-buyer-due-diligence) that could cause a buyer to walk away or renegotiate.

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