Exclusivity Period
A contractual period (typically 60-90 days) during which the seller agrees to negotiate only with one buyer, allowing focused due diligence without competition.
An exclusivity period (or "no-shop" period) is a contractual commitment from the seller to negotiate exclusively with one buyer for a specified time.
Typical Exclusivity Terms
| Element | Typical Range |
|---|---|
| Duration | 60-90 days |
| Extension | 30 days (often negotiated) |
| Trigger | LOI signing |
| Penalty | None (just expires) |
What Exclusivity Prevents
Seller cannot:
- Solicit other offers
- Negotiate with other parties
- Share information with competitors
- Encourage backup offers
Why Exclusivity Matters
For Buyers:
- Protects due diligence investment
- Prevents competitive pressure
- Allows thorough analysis
- Negotiation leverage
For Sellers:
- Signals buyer commitment
- Focuses the process
- Trade-off: loses competitive tension
Negotiating Exclusivity
Buyer strategies:
- Request longer period (90-120 days)
- Include automatic extension provisions
- Define clear start/end triggers
Seller strategies:
- Shorter periods (45-60 days)
- Performance milestones required
- Right to terminate if buyer not progressing
Related Terms
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