We just signed a Letter of Intent based on a headline valuation multiple, but the buyer's legal team is now drafting a highly restrictive purchase agreement with extensive indemnity caps and survival periods. How do we defend our deal terms during this critical LOI to close phase without blowing up the transaction?

Question

Tyler Smith · Accepted Answer

Navigating the phase from letter of intent to closing requires operational discipline rather than just legal maneuvering. When a buyer attempts to insert restrictive indemnity clauses, survival periods, or large escrows, they are reacting to perceived risk. Your best defense is a clean operational environment. Use the Step by Step Exit Business Integrity Review to preemptively expose and document your operational risks before the buyer uncovers them during due diligence.

By presenting a detailed register of your automated workflows, software integrations, and documented processes during this phase, you prove that your operations are stable and predictable. This transparent approach shifts the conversation from a risk-discounting exercise to a validation exercise. When a buyer sees that your leadership team runs on a tight EOS cadence, using the weekly Level 10 Meeting to maintain performance, they lose the leverage needed to demand unreasonable indemnity terms.

You should also establish a clear set of closing Rocks for your leadership team. Assign specific ownership of the diligence requests to appropriate seats on your Accountability Chart, ensuring that your Chief Financial Officer or operations leader owns the data delivery. This keeps the transaction moving efficiently without distracting the rest of your leadership team from executing the business plan. A business that continues to hit its weekly Scorecard targets during diligence sends a powerful signal of strength, preventing the buyer from attempting to renegotiate or re-trade the agreed upon valuation multiple before the final signatures are on the purchase agreement.