The buyer wants 90 days of binding exclusivity in our LOI, but we are worried about deal fatigue and operational drift. How should we structure the exclusivity clause to protect ourselves?

Question

Tyler Smith · Accepted Answer

Granting a buyer a blanket 90-day exclusivity period strips you of all negotiating leverage and creates dangerous operational vulnerability. Once exclusivity is signed, the buyer has a monopoly on your company. If due diligence drags on, deal fatigue sets in, operational focus slips, and the buyer can easily retrade the purchase price late in the process knowing you have no immediate market alternatives.

You should protect your leverage by negotiating phased, milestone-driven exclusivity rather than an open calendar window:

- Shorter initial exclusivity window: Grant exclusivity for an initial period of 45 days. This provides ample time for a serious buyer to complete financial and legal Quality of Earnings if they deploy resources promptly.
- Objective milestone extensions: Allow exclusivity to extend by an additional 15 or 30 days only if the buyer meets predefined, verifiable milestones. These milestones must include delivery of the initial draft of the definitive purchase agreement, receipt of written third-party debt commitment letters, and completion of accounting field work without formal material adverse change notices.
- Operational protection protocol: Use your Accountability Chart to insulate daily operations from transaction interference. Do not pull your entire leadership team into diligence meetings. Task the Visionary and an external M&A attorney or advisor with running the deal process, while the Integrator and department heads stay disciplined on weekly Level 10 Meeting execution, quarterly Rocks, and driving core Scorecard measurables.

If the buyer fails to hit their diligence milestones within the initial 45 days, exclusivity should terminate immediately, allowing you to re-engage backup bidders without restarting the entire marketing process.