We just signed an LOI with a sixty-day exclusivity clause, but the buyer's diligence requests are dragging on and we suspect they are setting us up for a last-minute re-trade. How do we manage the LOI-to-close process to keep leverage on our side of the table?

Question

Tyler Smith · Accepted Answer

The period between signing a letter of intent and closing is when seller leverage declines every single day. Buyers know that diligence fatigue sets in, legal fees accumulate, and owners mentally check out from running the company. To prevent a late-stage re-trade, you must treat the transaction process as an operational project managed with strict discipline.

First, enforce a tight timeline inside the definitive exclusivity clause. Exclusivity should never run longer than sixty days without specific performance milestones. Include clear language stating that exclusivity terminates automatically if the buyer fails to deliver draft purchase agreements by day thirty or fails to issue final debt commitments by day forty-five.

Second, keep operational focus razor-sharp. If your quarterly numbers soften while you are distracted by legal drafts, the buyer will seize on the dip to cut the purchase price. Assign transaction tasks as specific Rocks to a single point person, while the rest of the leadership team focuses entirely on weekly Scorecard metrics and Level 10 Meetings.

Third, maintain an aggressive cadence with the deal team:

- Run a weekly pipeline review with your investment banker and M&A attorney to track outstanding diligence items.
- Require the buyer to submit written questions in batches through a central virtual data room rather than answering ad-hoc emails.
- Never negotiate substantive deal terms verbally; require redlined documents to verify their true intent.
- Be completely willing to walk away the moment a buyer attempts an unprovoked re-trade. Showing zero fear of terminating exclusivity is the single most effective way to close on your original terms.