You’ve spent months talking to one buyer. You know their team. You’ve agreed on a number. So when the signed LOI hits your inbox, the hard part feels behind you. What’s left, you assume, is paperwork and a price you already agreed.
That instinct is reasonable. It’s also the most expensive misread a founder can carry into a sale. The LOI isn’t the close. It’s the moment the negotiation changes shape, almost entirely in the buyer’s favor.
The deal you think you’re signing
Picture the negotiation you’ve been having. Two parties. A buyer who knows your business, and you. One conversation, carried over months. A price you reached together. And exclusivity that surely runs both ways. You stop talking to other buyers, they stop talking to other targets.
It’s a clean, symmetric picture. It’s the one most founders carry into the LOI. It also bears almost no resemblance to the picture the buyer is working from.
The deal the buyer is signing
The moment your signature dries, two things happen at once. Your side of the market goes silent. And the buyer’s machine wakes up.
The buyer doesn’t see a two-party conversation. They see a project. Within days they activate a stack of specialist firms, often eight or more. Each one is a national practice that has spent careers studying a single kind of risk. You’re no longer negotiating with a partner. You’re negotiating against a team, all at once, and you’ll never meet most of them.
Eight firms, one job
It’s tempting to think of diligence as a neutral check that the company is what you said it is. It isn’t. Every firm in the stack is paid by the buyer, and every firm is measured against one outcome. Find something that justifies paying less.
- Quality of earnings re-cuts three years of your revenue and expense recognition. Anything aggressive becomes a deduction from the multiple.
- Tax hunts for sales-tax nexus, R&D credit positions, and transfer pricing. Each finding becomes an escrow or a holdback you never budgeted for.
- Legal maps every contract for change-of-control terms and IP gaps. Anything ambiguous becomes a rep, a survival period, or an indemnity cap.
- Commercial calls your customers and competitors, then grades the story in your CIM from the outside in.
- HR, IT, insurance, and environmental each audit their corner, and each unresolved item lands as a reserve, a price-chip, or a fight over closing mechanics.
Any single finding sounds small. Stacked together, they’re the buyer’s toolkit for repricing a deal you thought was already priced.
The asymmetry
This is the clause founders read past. Exclusivity feels balanced because both parties signed the same document. Read it again. The restrictions almost all point one way.
Put the two sides next to each other and the picture is hard to unsee. The same 60 days that tie your hands leave the buyer’s completely free.
How leverage survives
None of this makes exclusivity a trap you can’t escape. But leverage isn’t something you can summon in week six, once the findings start landing. You have to engineer it before you ever sign. Four moves carry it through.
- Before you sign, run a real market. Multiple credible bids are the only source of leverage that survives once exclusivity begins. The threat of the next buyer is your power. Manufacture it early.
- In the LOI, keep exclusivity tight. Thirty to forty-five days. A reverse termination fee. Diligence scope locked, and price-chip mechanics agreed up front rather than discovered later.
- During, put a senior counterweight across the table. The partner who pitched you runs your deal, in every meeting. Not a junior on rotation.
- After the LOI, negotiate the mechanics. The headline price is set at signing. The proceeds are set later, in working-capital pegs, escrows, indemnity caps, and holdbacks. This is where the real money moves.
Exclusivity isn’t the finish line. It’s where seller leverage starts to fade, unless you’ve built the structure to hold it.