What Exclusivity Actually Binds You To

Non-binding is a partial description

An LOI usually states that the price and structure are non-binding. Several clauses are binding: exclusivity, confidentiality, expense allocation, and sometimes a break fee.

Exclusivity means you cannot solicit, entertain, or respond to another buyer for the stated window. In a market where thirty groups may be interested in a practice like yours, that clause is the single most valuable thing you give away, and you give it away for free.

The window is longer than it reads

A 60 day exclusivity period typically contains automatic extensions tied to diligence milestones. Read the extension triggers. A period that reads as 60 days routinely runs 90 to 120.

During that time the buyer conducts a chart audit, a billing review, and a quality-of-earnings analysis. Retrades happen late in that window, after your alternatives have gone cold. That sequencing is not accidental.

What to negotiate before signing

Shorten the window to 30 to 45 days with no automatic extension. Tie any extension to a written mutual agreement. Add a fiduciary out if a materially superior unsolicited offer arrives. Cap your expense reimbursement obligation.

Most importantly, price the whole structure before you sign, not after. Once exclusivity runs, your only remaining leverage is the willingness to walk, and by then walking costs you months.