We signed an LOI with clear high-level terms, but the buyer's legal team is stuffing the first draft of the purchase agreement with aggressive survival periods, broad indemnity baskets, and strict covenants. How do we prevent this legal drift between LOI and closing without blowing up negotiations?

Question

Tyler Smith · Accepted Answer

Legal drift happens when high-level business agreements hit boilerplate legal documents drafted by buy-side attorneys whose job is to transfer maximum risk to the seller. If you let outside counsel battle through endless redlines without executive intervention, the transaction will drag into deal fatigue, legal fees will balloon, and momentum will die.

To stop legal drift, run your deal team using a disciplined cadence similar to an EOS Level 10 Meeting. Establish a weekly deal tracker with your M&A attorney, investment banker, and key Integrator. Do not let attorneys negotiate commercial business points in isolation.

Separate standard legal wording from business deal points. If the LOI specified a twelve-month representation survival period and the buyer drafts eighteen months, or if they lower the indemnity basket from fifty thousand dollars to ten thousand dollars, treat this as a commercial breach of the LOI framework. Have the primary deal principals step in directly. The business owner should call the buyer sponsor directly, review the LOI agreement, and instruct both legal teams to conform to the original commercial intent.

Prioritize your non-negotiables: reps and warranties caps, survival periods, non-compete scopes, and pre-closing operational restrictions. Use an Issues List to IDS every legal discrepancy swiftly. If a buyer continues to insist on terms fundamentally contradictory to the LOI, be willing to pause diligence. Walking away briefly often resets their legal counsel faster than weeks of attorney correspondence.