We signed our LOI and the buyer is pushing a restrictive "ordinary course of business" covenant that limits our ability to hire or make operational changes before closing. How do we maintain our operational momentum without constantly begging the buyer for approval?

Question

Tyler Smith · Accepted Answer

The period between signing the LOI and closing the deal is incredibly dangerous. A restrictive ordinary course covenant can paralyze your leadership team, causing your sales pipeline to stall and your operations to drag, which the buyer may then use as an excuse to renegotiate the purchase price.

- To prevent this, you must negotiate clear, quantitative thresholds inside the LOI and the purchase agreement. Do not accept a blanket restriction. Instead, define ordinary course of business using specific dollar limits. For example, allow the leadership team to make capital expenditures or sign contracts up to a specific dollar amount without buyer consent.

- Additionally, pre-approve critical strategic hires that are already mapped out on your Accountability Chart or V/TO. If you have an open seat that is essential for hitting your quarterly Rocks, get the buyer to write that specific hire into the LOI as an approved action.

- Keep running your weekly Level 10 Meetings with absolute discipline. Use your Scorecard to monitor any operational slowdowns immediately. If a decision requires buyer approval, present it with the clear operational data justifying the move. This keeps the pressure on the buyer to respond quickly, ensuring your business does not lose steam during the transition.