Exclusivity looks reasonable and reads as a formality. A buyer about to spend money on due diligence does not want to be gazumped, which is fair. What it means for a seller is that from the day it is signed, their negotiating position only weakens.
What It Actually Costs
You cannot speak to another buyer, so you have no alternative and the buyer knows it. Your business is being examined by someone who may not proceed. Staff, customers and suppliers begin to sense that something is happening. Your own time goes into due diligence responses rather than into trading — which in an owner-managed business means the numbers can genuinely soften while the deal is running, giving the buyer a fresh argument on price. And your leverage falls every week, because walking away costs you everything already spent while the buyer simply moves on. Then the outcome sellers do not plan for: the buyer withdraws at the end of it. You restart with less time, less energy, a distracted business, and a market that may have noticed. None of that is a reason to refuse exclusivity, which is usually necessary. It is a reason to price it.
How to Negotiate It
Three things, and none of them is unreasonable to ask. Keep the period as short as is realistic for the work the buyer genuinely needs to do — and resist the instinct to grant a comfortable margin, because the period will be used in full whatever its length. Tie it to the buyer doing something concrete: producing evidence of funding, instructing advisers, delivering a due diligence request list within a set number of days. A buyer who will not commit to any of that is asking you to take your business off the market on trust. Make it lapse automatically rather than roll on or require notice to terminate, and consider linking any extension to demonstrable progress. Two further points. Watch the costs provision that usually sits beside it — who pays what if the deal does not complete, and whether you are exposed to the buyer’s abort costs. And remember the underlying protection is not in this clause at all: a business prepared before going to market gets through diligence quickly and defends its price, while an unprepared one concedes on each finding with no alternative bidder in the room.
The test worth applying: if this buyer disappeared at the end of the exclusivity period, how much worse off would I be? If the honest answer is “considerably”, the period is too long or too unconditional.
Before you sign the heads: 01 5827148.
Richard O’Shea — Solicitor & TEP
Solicitor at Mary Molloy Solicitors, established 1981, and a TEP of the Society of Trust and Estate Practitioners. The firm acts for buyers and sellers on business sales and acquisitions — structure, heads of terms, due diligence, the sale agreement, warranties and disclosure, completion and what follows it. Because a substantial share of Irish business sales are retirement exits, the firm’s estate and succession practice sits alongside the transactional work: the deal and what happens to the proceeds are usually the same client’s problem. Nothing here is tax advice — structure is tax-driven and that belongs with your accountant and Revenue, before heads of terms are signed. 01 5827148 · richardoshea@marymolloysolicitors.com · LinkedIn
General information, not legal advice. This website contains general information about Irish law on business sales and acquisitions. It is not legal advice and does not create a solicitor—client relationship. Every transaction turns on its own facts — the structure, the documents, the parties, the consents required — and advice on yours requires a consultation.
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