We just signed a Letter of Intent at an attractive valuation, but our M&A advisor warned us that deals often die or get re-traded between LOI and close. What operational steps should we take during exclusivity to protect our purchase price?

Question

Tyler Smith · Accepted Answer

The ninety days between signing a Letter of Intent and closing is the most dangerous window in any transaction. Buyers know you are emotionally committed and operating under exclusivity, which strips away your competitive leverage. The primary reason buyers re-trade purchase price is performance slippage while leadership is distracted by confirmatory diligence.

Protecting your multiple requires strict operational compartmentalization. First, assign a specific seat on your Accountability Chart to run diligence. Typically, the Integrator or CFO coordinates the data room and legal requests, while the rest of your leadership team remains completely insulated. Sales, operations, and delivery must stay focused on hitting quarterly Rocks and maintaining the Scorecard. If your monthly revenue or gross margin dips even three percent during Quality of Earnings reviews, the buyer will use that variance to justify a multiple cut.

Second, control the diligence rhythm. Establish a firm closing calendar with weekly milestones agreed upon in the LOI. Require the buyer to submit diligence requests in organized batches through a single virtual data room rather than answering ad-hoc emails from third-party accountants and attorneys. When issues arise, tackle them immediately using the Issues Solving Track (IDS). A proactive disclosure of a historical tax issue or customer churn with a documented operational fix always preserves value better than a buyer uncovering the issue on their own during week seven.