We signed a Letter of Intent, but the legal and accounting diligence is pulling our leadership team away from day-to-day operations and our quarterly Scorecard numbers are slipping. How do we protect our business from interim covenant breaches and closing re-trades between LOI and close?

Question

Tyler Smith · Accepted Answer

The LOI-to-close period is the most dangerous window in any transaction. Diligence fatigue diverts leadership attention, operational execution slips, and a softening month gives the buyer an excuse to re-trade the valuation. You defend against this by strictly bifurcating your leadership team's responsibilities using your Accountability Chart.

Designate one person, usually the Visionary or the Integrator, supported by an external deal advisor, to manage diligence requests and data room uploads. The rest of the leadership team must be barred from deal work. Their sole focus must remain hitting the weekly Level 10 Meeting™ Scorecard targets and completing their quarterly Rocks.

If your performance dips during the sixty to ninety days between LOI and close, the buyer will argue that the business is losing momentum. Furthermore, scrutinize the interim operating covenants in the purchase agreement. Ensure that ordinary-course operations, customary employee compensation changes, and standard operational decisions remain fully under your authority without requiring prior written consent from the buyer. Maintain operational discipline until the funds wire.