Say a business owner gets an offer she’s been waiting three years for. $1.5 million for a company doing $500,000 in SDE (seller’s discretionary earnings, the owner-adjusted profit a buyer is really paying for). Three times SDE, clean structure, an SBA-backed buyer with real industry experience.
She reads the price. She reads the deal structure. She signs.
What she skims past is a short section near the end titled “Exclusivity,” which says that for the next 60 days she won’t talk to, negotiate with, or solicit offers from anyone else.
That’s the no-shop clause. It’s standard, it’s reasonable in most deals, and it’s the single biggest shift in leverage during the whole sale process.
What you’re actually agreeing to
A no-shop (also called an exclusivity period) does what it sounds like. Once the letter of intent is signed, you stop marketing the business. The other interested buyers get a polite “we’re under LOI” and drift away, because a buyer who’s been told to wait 60 days usually doesn’t. They find another deal.
For the buyer, that’s the point. They’re about to spend real money on a quality of earnings review, legal work, and lender fees, and they don’t want to do that while you’re fielding a better offer.
Fair enough. But look at the math on your side of the table.
Before the LOI, you had several buyers and could pick between them. After it, you have one buyer, and that buyer knows it.
Where it gets dangerous: the clock and the retrade
Here’s the rub. Most LOIs give the buyer 45 to 90 days of exclusivity, and diligence is where deals get renegotiated. A buyer digs through three years of financials, finds that $60,000 of your add-backs (expenses you claim were personal or one-time) won’t hold up, and comes back with a revised number.
$60,000 of SDE at a 3x multiple is $180,000 off the price. The new offer is $1.32 million.
This is called a retrade, and it lands on day 35, when you’ve got 25 days left on the exclusivity clock and no backup buyers. Walking away means starting over with a business that’s been quietly off the market for a month and a half. Staying means taking the lower number.
Most owners stay. That’s not a character flaw, it’s arithmetic. And a buyer who’s done this before knows that too.
The buyer doesn’t have to be acting in bad faith for this to happen. Diligence turns up real issues, and some price adjustments are legitimate. The problem is that during exclusivity the seller has almost no way to test whether a given adjustment is fair, because there’s nobody else to compare it to.
The lender timeline nobody mentions in the LOI meeting
There’s a second trap that has nothing to do with price. If the buyer is using an SBA 7(a) loan, which is how a large share of small business acquisitions get financed, the SBA’s 7(a) program has its own underwriting steps, and the lender needs time for appraisals, tax transcripts, and credit approval.
Diligence might take 40 days. Financing can take another 30 to 60 on top of that. If your LOI says exclusivity ends at day 60 and the lender doesn’t finish until day 90, you have one of two outcomes: the clock expires mid-deal and the buyer asks for an extension, or the clock expires and you’re free to shop a buyer who’s already spent $25,000 getting this far. Neither is clean.
Nobody wants to have that conversation on day 58. The time to have it is before you sign.
If you want a read on how the broader small business market is moving, the BizBuySell Insight Report publishes quarterly sale data, and it’s a useful reminder that a 60-day window is tight for a financed deal.
How to negotiate the clause instead of just signing it
You almost never want to strike exclusivity. You want to shape it.
A shorter initial window, say 45 days, with the option to extend another 15 to 30 if the buyer is hitting agreed milestones (QoE delivered, lender term sheet in hand, purchase agreement drafted). If the buyer misses a milestone, exclusivity ends. That keeps them moving.
A price-protection clause that says any post-diligence price reduction has to be tied to specific, documented findings, not a general “we found some things.”
A carve-out that lets you respond to unsolicited offers for a defined window if the buyer hasn’t delivered a lender commitment letter by a set date.
None of these are aggressive asks. A serious buyer will agree to most of them, and how they react to being asked tells you something about how the rest of the deal will go.
The takeaway
Signing an LOI feels like crossing a finish line. It’s actually the moment you give up your best leverage in exchange for a price that isn’t final yet.
So before you sign, read the exclusivity section as carefully as the price. Know how long it runs, what it takes to extend, and what happens if the buyer retrades. Have your add-backs documented before the LOI, so nothing in diligence surprises you. And keep your backup buyers warm in a way the clause allows, because “we’re under LOI” is a lot easier to say when you actually have a plan for what happens if it falls apart.
Curious what your business is worth, and what a strong LOI would look like for it? Reach out to The Turn Business Advisors for a confidential conversation. No pressure, no listing agreement required to talk.