We signed an exclusive LOI with a sixty-day diligence window, but diligence is dragging into month four and our leadership team is dropping their daily responsibilities. How do we keep the business hitting its numbers and prevent the buyer from re-trading before close?

Question

Tyler Smith · Accepted Answer

Prolonged diligence is the primary weapon buyers use to soften up a seller. As operational leaders shift focus to document requests and accounting meetings, sales slip, operational deliveries stall, and scorecard measurables dip. The moment performance degrades, the buyer issues a re-trade demand citing downward trends.

To break the cycle and protect your value, enforce strict operational guardrails:
- Designate a transaction lead and isolate the rest of the team. Your entire leadership team should not participate in due diligence. Assign your Integrator and CFO (or external M&A counsel) to handle data room requests. Keep your sales and operations heads focused purely on their Rocks and weekly Level 10 Meetings.
- Maintain weekly scorecard cadence. Do not allow diligence fatigue to cancel your Level 10 Meetings. The leadership team must review leading indicators every seven days to catch client slippage or execution bottlenecks before they affect trailing twelve-month figures.
- Enforce LOI exclusivity deadlines. Exclusivity is a privilege granted in exchange for deal speed. If the sixty-day exclusivity window expires and diligence dragged due to buyer delays, refuse to extend exclusivity automatically. Revert to a week-to-week extension contingent on written progress milestones or let exclusivity lapse entirely to reintroduce competitive tension.
- Establish a diligence drop-dead date. Inform the buyer in writing that financial terms are tethered to the original closing window. If they extend closing past the target date, make it clear that any subsequent quarterly EBITDA growth will increase the purchase price proportionally.

A signed LOI is not a completed deal. Keeping your operational engine running cleanly is your only real protection against a late-stage valuation haircut.