The buyer demands ninety days of exclusivity in the LOI with automatic extensions if diligence is ongoing. How do we structure exclusivity to avoid losing our leverage?

Question

Tyler Smith · Accepted Answer

Signing an open-ended or excessively long exclusivity clause is how owners lose all their deal leverage. Once you grant exclusivity, you cannot talk to other suitors, your process goes cold, and the buyer knows you are financially and emotionally committed. That is when diligence slows down and aggressive re-trading begins.

Never accept a blanket ninety-day exclusivity window, and never agree to automatic extensions based on vague diligence progress. Instead, negotiate a staged exclusivity timeline tied strictly to concrete, verifiable buyer performance milestones:

- Phase one: Grant thirty to forty-five days of exclusivity for the buyer to complete their third-party Quality of Earnings field work and deliver a fully underwritten financing commitment.

- Phase two: Exclusivity extends for another fifteen days only if the buyer delivers the first comprehensive draft of the definitive purchase agreement that reflects the agreed commercial terms in the LOI without material re-trades.

- Hard termination: If the buyer fails to hit a milestone or attempts to re-trade headline pricing based on findings that were already disclosed, exclusivity terminates immediately.

Tie your exclusivity directly to weekly communication cadences. If diligence stalls or third-party advisors drag their feet, the clock runs out on the buyer, not on you. Exclusivity is a privilege the buyer earns through swift execution, not an entitlement they use to run out the clock on your business.