Do not grant exclusivity for free
A no-shop transfers leverage and should purchase real certainty.
A no-shop provision prevents the seller from soliciting or negotiating with other buyers for a defined period. Buyers request it because they do not want to spend money on diligence and documentation while the seller continues to shop their offer.
The request is reasonable only after the buyer has earned exclusivity.
Before signing, resolve the material economics and structure. The letter of intent should address price, cash at close, rollover equity, earnouts, seller financing, working capital, financing, management roles, major indemnification concepts, expected approvals, and the path to closing. Unresolved terms tend to move in the buyer's favor after competition is suspended.
Keep the exclusivity period specific and as short as the work plan reasonably allows. Tie extensions to objective progress, not the buyer's unilateral request. Require a detailed diligence list, prompt document drafting, senior decision-maker access, and evidence that financing and internal approvals are advancing.
Consider termination rights if the buyer reduces price, changes structure, misses milestones, or fails to deliver transaction documents. The exact legal exceptions depend on the seller's form of organization and circumstances, so experienced M&A counsel should draft the provision.
Most importantly, do not grant exclusivity while another credible buyer is still capable of improving the outcome. Competition should end only when one proposal is sufficiently superior and sufficiently complete.
A no-shop is not administrative language. It is the moment when the seller gives the buyer control of the process. That control should be exchanged for better terms, a credible timetable, and measurable closing certainty.