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

Exclusivity is a major concession, and you must not give it away without receiving binding operational commitments in return. To keep the buyer from stalling and chipping away at your valuation, you must structure the sixty-day window with hard, weekly milestones. Divide the diligence process into clear phases: financial, legal, insurance, and operational. Build these milestones directly into the Letter of Intent as conditions for maintaining exclusivity. For example, if the buyer does not complete their Quality of Earnings fieldwork by day twenty, or if they fail to deliver the first draft of the purchase agreement by day thirty-five, the exclusivity period should automatically terminate. Use your weekly leadership meetings to review these deal milestones just like you would review your quarterly Rocks. If the buyer starts lagging, address it immediately. You must also maintain operational discipline during this critical window. Do not let your leadership team get distracted by the deal. If your performance dips during diligence, the buyer will use it as an excuse to renegotiate the multiple. Keep your Scorecard updated, run your operations with the same intensity as always, and make it clear to the buyer that your business is running on a proven operating system. If they see that your operations remain strong and that you are tracking their diligence progress with high discipline, they will be less likely to try any late-stage renegotiation tactics.