We are about to sign an LOI with a forty-five-day exclusivity period, and we suspect the buyer plans to use the Quality of Earnings phase to grind us down on price once we are locked up. How do we structure a pre-LOI diligence package to maintain our walk-away leverage?

Question

Tyler Smith · Accepted Answer

The forty-five-day exclusivity period is where sellers lose all their leverage. Once you sign the letter of intent, you cannot talk to other buyers, and the buy-side Quality of Earnings team will use that isolation to find flaws and demand a price reduction.

To maintain your walk-away leverage, you must run a comprehensive sell-side Quality of Earnings audit before you ever market the business or sign an LOI.

By hiring your own independent accounting firm to audit your books first, you identify and address any accounting anomalies, tax exposures, or margin inconsistencies on your own terms. You can resolve these issues or prepare clear, defensible explanations before the buyer ever sees them.

When you present a clean, pre-audited financial package alongside the LOI, you signal to the buyer that you are highly prepared and that your numbers are bulletproof. This leaves them with very little room to argue for post-LOI adjustments.

Furthermore, always maintain optionality. Do not stop building relationships with other potential buyers, and do not let your business operations slip. Keep running your weekly Level 10 Meetings and hitting your quarterly Rocks.

If the buyer attempts to retrade the deal during the exclusivity window, your operational momentum and pre-packaged financials give you the confidence to say no and walk away if they refuse to honor the agreed terms.