LOI anatomy part three: control the path to closing
Timelines, access, and exclusivity determine who holds leverage next.
The final part of a letter of intent (LOI) concerns process. These provisions can determine whether the seller reaches a closing efficiently or spends months in an open-ended negotiation.
Set an exclusivity period with a clear start and automatic end. Align it with a diligence plan, management availability, document-production schedule, and target dates for the first purchase-agreement draft, financing evidence, approvals, signing, and closing. If an extension is possible, tie it to objective progress and mutual agreement.
Define confidentiality and public-announcement rules. Clarify which employees, customers, suppliers, and other counterparties may be contacted, by whom, and at what stage. Premature outreach can create operating risk even when the transaction ultimately closes.
Identify the binding provisions precisely. Confidentiality, exclusivity, expenses, access, governing law, and certain other clauses are often intended to be binding even when the obligation to complete the transaction is not. The wording and legal effect vary, so transaction counsel should advise on the document as a whole.
Finally, consider what happens if the process departs from the LOI. If the buyer reduces value, adds a financing condition, or misses milestones, does exclusivity continue unchanged? The seller may not secure every protection, but the issue should be discussed before leverage shifts.
An LOI is not the finish line. It is the operating plan for the most sensitive phase of the sale.