The buyer signed an LOI with a sixty day exclusivity period, but their diligence requests are dragging and day forty-five is approaching with no definitive agreement in sight. How do we stop them from running down the exclusivity clock to force last minute concessions?

Question

Tyler Smith · Accepted Answer

Buyers often use exclusivity as leverage. Once you grant exclusivity, you lose the ability to market the company, and every day that passes tilts the negotiating balance toward the acquirer. If diligence is dragging without clear milestones, the buyer is either unprepared or deliberately stalling to run down your clock and force price concessions in the final hours.

You must reassert control before day fifty. Bring the issue directly to your weekly Level 10 Meeting agenda for the transaction team and use IDS to address it immediately. Send the buyer a written milestone audit. State clearly that the exclusivity period is contingent on specific progress markers: delivery of the initial definitive agreement draft, completion of the Quality of Earnings field work, and confirmed submission of their lender package.

Do not grant a blanket extension of exclusivity. If they request more time, require an automatic expiration unless they satisfy two non-negotiable terms. First, they must release the initial draft of the purchase agreement with an acceptable indemnification framework. Second, they must deposit an additional, non-refundable earnest money payment into escrow that applies toward the purchase price at close but is forfeited if they walk away without cause.

Remind the buyer in plain language that if definitive agreements are not substantially negotiated by day sixty, exclusivity will lapse automatically and you will immediately re-engage the runner-up bidders from your initial process. Serious institutional buyers will compress their diligence timeline when they realize you are entirely willing to walk away from the table.