We just signed an LOI with a forty-five day exclusivity clause, but a major strategic competitor just reached out wanting to make an unsolicited bid. How do we handle this inbound interest without violating our LOI or losing our leverage?

Question

Tyler Smith · Accepted Answer

You must strictly respect the exclusivity clause in your Letter of Intent. Violating a no-shop provision is a breach of contract that can trigger lawsuits, damage your reputation, and cause your current buyer to walk away immediately. However, you do not have to ignore the inbound interest entirely.

Your first step is to acknowledge the inbound inquiry through your investment banker or M&A advisor. They can reply with a standard, neutral message stating that the company is currently engaged in an exclusive discussion and cannot share information or enter negotiations at this time. This keeps the door open without violating your legal obligations.

The real leverage comes from using this timeline as a hard boundary for your current buyer. Keep your current buyer on a tight schedule during due diligence. Use your weekly Level 10 Meeting™ to monitor diligence requests and ensure your team meets every deadline. If your current buyer misses milestones or attempts to re-trade the price, you can refuse to extend the exclusivity period when the forty-five days expire.

Once the exclusivity period lapses without a signed purchase agreement, you are free to immediately engage the strategic competitor. Knowing there is active interest on the sidelines gives your leadership team the confidence to hold the line on your valuation during the final stages of closing. Focus on hitting your quarterly Rocks to keep your performance strong so that your business remains highly attractive to both parties.