We signed an LOI with a sixty-day exclusivity period, but the buyer's diligence requests keep expanding and we are entering week seven without a definitive purchase agreement. How do we prevent diligence fatigue and stop the buyer from retrading the deal?

Question

Tyler Smith · Accepted Answer

Diligence drag is either a deliberate negotiating tactic or proof of an undisciplined buyer. Either way, extended diligence works against the seller. As time drags on, deal fatigue sets in, the leadership team gets distracted, and core operations suffer, giving the buyer an excuse to retrade purchase price.

To regain control, enforce a firm timeline. When exclusivity expires or nears expiration, do not grant an automatic extension. Require the buyer to deliver a clean draft of the purchase agreement and sign off on completed diligence phases before granting a seven-to-fourteen-day extension.

Maintain operational focus. Use your weekly Level 10 Meeting™ to keep your leadership team locked on quarterly Rocks and baseline business performance. If revenue slips during diligence, you give the buyer mathematical leverage to haircut your valuation.

Appoint one person on your Accountability Chart, typically the Integrator or an outside M&A advisor, to manage the virtual data room and buyer communications. Keep all other operational leaders completely insulated so customer delivery and sales never falter.

If the buyer attempts a retrade based on non-material issues discovered in diligence, demand formal written justification tied to measurable EBITDA degradation. Be fully prepared to walk away. Your credible willingness to kill the transaction is your single strongest defense against post-LOI price erosion.