We signed an LOI with a sixty-day exclusivity period, but the buyer is dragging out their due diligence requests, and we suspect they are trying to run out the clock to pressure us into a late-stage price reduction. How do we structure milestone-based exclusivity terms to maintain our leverage and prevent a re-trade?

Question

Tyler Smith · Accepted Answer

Signing a letter of intent with a standard sixty-day exclusivity period gives the buyer a monopoly on your time, which they can abuse by dragging out due diligence. As the deadline approaches, they may slow-walk their requests to pressure you into a corner, knowing that you have spent months on the deal and do not want to start over. To maintain your leverage, you must avoid granting a blanket, unconditional exclusivity period. Instead, structure your exclusivity around performance-based milestones. Divide the diligence period into clear, fifteen-day phases. For the buyer to earn the next block of exclusivity, they must hit specific operational targets. For example, Phase One exclusivity only extends to Phase Two if the buyer delivers their initial Quality of Earnings draft and their first draft of the purchase agreement by day thirty. If they miss a deadline, the exclusivity automatically expires, allowing you to walk away or talk to other bidders. This approach keeps the buyer focused and prevents them from treating your business like an option they can exercise at their convenience. It also mirrors how we run our businesses using Rocks and weekly tracking. By breaking the closing process down into structured, accountable sprints, you keep both parties aligned, protect your operating momentum, and significantly reduce the risk of a late-stage price reduction.