The buyer's Letter of Intent demands a seventy-five day exclusivity period to complete their due diligence and draft the definitive agreements. How do we structure milestone-based termination rights so they cannot tie up our business and grind us down on price at the eleventh hour?

Question

Tyler Smith · Accepted Answer

A seventy-five day exclusivity period is a lifetime in a transaction, and it is a classic tool used by buyers to drain your leverage. As the clock ticks down, you become more emotionally committed to the deal, while they find minor issues to justify a price reduction. To prevent this, you must never grant unconditional exclusivity. Instead, structure your letter of intent with hard, milestone-based termination rights that the buyer must hit to maintain their exclusivity. Break the transaction runway into clear operational phases. For example, give them twenty days to complete their initial Quality of Earnings field work. If they fail to deliver a draft report by day twenty, exclusivity terminates. Set another milestone at day forty-five for the delivery of the first draft of the asset or stock purchase agreement. A third milestone at day sixty should require a written commitment letter from their senior lender. If the buyer misses any of these operational gates, you must have the unilateral right to terminate exclusivity and walk away. This keeps the pressure on the buyer and prevents them from slow-walking the process. Review these transaction milestones in your weekly Level 10 Meeting™ with your leadership team to monitor progress. Treat these deal gates like critical Rocks. By maintaining the right to walk if they stall, you keep the power dynamic balanced and ensure the buyer remains focused on closing the deal on the terms you originally agreed to.