LOI Checklist for Sellers 2026: What to Negotiate Before Signing

LOI Checklist for Sellers in 2026: What to Negotiate Before You Sign

Last updated: October 30, 2026

Before you sign a letter of intent, lock down the terms that decide what you actually take home: how much of the price is cash at close, how the working capital peg is set, what counts as debt, how big the escrow is and when it comes back, how long exclusivity lasts and what ends it early, and how much diligence the buyer still gets to do. Reps, indemnity detail and disclosure schedules can wait for the purchase agreement. Most of an LOI is non-binding, but exclusivity, confidentiality, expenses and governing law usually bind from signature, and an express promise to negotiate in good faith can create real liability under Delaware law.

Key takeaways

• Your leverage peaks the day before you sign. The median data room in our Q3 2026 dataset had 5.5 bidders; exclusivity cuts that to one (State of M&A Data Rooms, Q3 2026).
• Compare offers on the Net Proceeds Ladder, not the headline. Debt, debt-like items, the peg, fees, escrow, deferred pieces and tax all sit between the LOI price and your bank account.
• Escrow is near-universal. SRS Acquiom's 2026 Deal Terms Study found escrow or a holdback in 88% of 2025 private-target deals, with a median of 10.0% of transaction value without RWI and 2.8% with it (DealLawyers.com).
• Write the peg method into the LOI. Working capital adjustments now appear in more than 90% of transactions, per SRS Acquiom's 2026 working capital study.
• Exclusivity binds even when the rest doesn't. A Delaware court found a breach of a binding exclusivity clause on October 27, 2026 (Davenport v. Toro).
• SBA-financed buyers can't offer earnouts. SOP 50 10 8.1, effective October 1, 2026, prohibits seller earnouts and requires a seller note to sit on full standby to count as buyer equity (SBA).
• Build the two-tier room before the LOI. Rooms on Peony took a median 12.6 days from first opening to the first outside viewer; that is time you don't want to spend inside exclusivity.

I run Peony, a data room platform used by 8,000+ customers in 60+ countries. Half of the 399 new M&A deals that came onto Peony in Q3 2026 were sell-side processes, so I see the LOI moment from inside the room: the week the bidder list collapses to one, the confirmatory folders open, and every loose definition in the letter turns into a negotiation the seller now has to win without alternatives. This guide is for owners holding an LOI (or about to), the CFO or fractional CFO modelling what it is really worth, and sellers choosing between two or more offers. If you're buying, the independent sponsor LOI playbook covers the other side of the table.

What should a seller negotiate before signing an LOI?

Negotiate every term that sets your net proceeds or your exit options before you sign, because exclusivity removes your alternatives the day you do. That comes down to seven terms. Everything else can be left to the purchase agreement, as long as the LOI fixes the method.

The reason is the leverage clock. Before the LOI, each bidder knows others are reading the same room. After it, the buyer knows you have stopped talking to anyone else, and any point the letter left open (the peg, the debt list, the escrow, the diligence scope) gets negotiated by a buyer with no competition. That is where retrades come from: not from bad faith, but from open terms meeting a seller who can no longer walk across the street.

Is an LOI legally binding?

Mostly not: the price and deal terms in a typical LOI are non-binding, so either side can walk away before a purchase agreement is signed. But the clauses the LOI labels binding, usually exclusivity, confidentiality, expenses and governing law, are enforceable from signature, and they are the ones that constrain the seller most. Exclusivity is the big one: it binds you, not the buyer, to stop talking to other buyers.

What the Delaware courts have said

Two Delaware decisions frame how a "non-binding" LOI can still bite.

• An express promise to negotiate in good faith is enforceable. In SIGA Technologies v. PharmAthene, the Delaware Supreme Court held in 2013 that a promise to negotiate in good faith toward terms footed "Non-binding terms" was enforceable, and that expectation damages are available when the court finds the parties would have reached agreement but for the bad faith. In December 2015 it affirmed the Court of Chancery's award of $113 million in expectation damages (Harvard Law School Forum on Corporate Governance). That is established law, and it cuts both ways: a seller who signs a good-faith clause and then walks for a better offer carries the same exposure.
• A binding exclusivity clause can be breached even when the deal never closes. In Davenport Investments, LLC v. Toro Real Estate Partners, LLC (Del. Super. Ct., decided October 27, 2026), a letter of intent for a real estate joint venture made a few ancillary provisions binding, including exclusivity, and disclaimed the core economic terms. One side terminated the letter and closed the acquisition without the other, and the court held that this breached the exclusivity provision. It awarded no damages, though: because the LOI left the economics non-binding, it was neither a fully binding (Type I) nor a major-terms (Type II) preliminary agreement, so only reliance damages were available, and the claimant had sought only expectation damages (Delaware Superior Court opinion). The same court ordered the return of a $100,000 due diligence deposit that had not been shown to be spent on diligence.

Read together, the drafting lessons for a seller are concrete. List the binding sections by number. Either leave out a duty to negotiate in good faith or limit its remedy to out-of-pocket costs. If you want a remedy against the buyer (for a confidentiality breach, poaching your staff, or walking after a retrade), write that remedy into the LOI, because expectation damages may not be available. And spell out what any deposit covers and when it is refundable. Other states apply their own tests, so have your M&A counsel check the governing-law clause against these points; this section is general information, not legal advice.

What is the Net Proceeds Ladder?

The Net Proceeds Ladder is the walk from the headline price in an LOI to the cash that reaches your account at closing, one deduction per rung. Each rung maps to an LOI term you can still negotiate, which is why the ladder belongs in front of you and your CPA before you sign, not after the first draft of the purchase agreement.

The numbers are illustrative arithmetic, not benchmarks; your CPA's model will differ by entity type, state, structure and how the price is allocated. The shape is the point. In this example, $7.2M of the $20M headline (the note, the earnout, the rollover and the escrow) arrives later, depends on someone else, or both.

Two tax rules belong on the CFO's checklist at this stage. In an asset sale, "both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594" to report the price allocation, so the allocation is a negotiated term with tax consequences on both sides (IRS). And a seller note or earnout does not defer everything: IRS Publication 537 says "you must report any depreciation recapture income in the year of sale," even on an installment sale, and treats a sale whose total price can't be determined by year end as a contingent payment sale (IRS Publication 537). A deal heavy on deferred money can leave you paying part of the tax before you've received the cash. Our tax due diligence checklist covers what the buyer will examine on the other side.

How do cash at close, seller notes, earnouts, rollover and escrow compare?

Rank them by certainty. Cash at close is worth its face value. Escrow usually comes back, but it is at risk until the survival period ends. A seller note is a loan to the buyer, behind its bank. An earnout is a contingent payment whose outcome the buyer largely controls. Rollover is equity you can't sell until the buyer's next exit.

Escrow sizes have a clear lever: representations and warranties insurance. The ABA's 2025 Private Target Deal Points Study, built on 139 deals priced between $25 million and $900 million, found RWI referenced in 63% of deals, up from 55% in the 2023 study (K&L Gates summary of the ABA study). If your buyer plans to buy a policy, an LOI escrow at the 10% non-RWI level is worth challenging; our rep and warranty insurance guide covers how the policy changes the indemnity.

Earnouts deserve the steepest discount in your model. SRS Acquiom's 2026 earnout and milestone trends report found that, on private-target deals with an earnout closed between 2021 and mid-2024 (excluding life sciences), sellers collected about 21% of the maximum potential earnout dollars, and its 2024 M&A Claims Study found sellers contested the earnout in at least 28% of deals. If an earnout is unavoidable, the metric, the accounting rules, the buyer's operating covenants and the cap need to be in the LOI, not deferred; how to structure an earnout goes through the clause-by-clause design. Rollover terms (how the rolled stake is valued and taxed) are covered in rolling equity in M&A deals.

If your buyer is financing with an SBA 7(a) loan

Smaller deals are often SBA-financed, and the current rules change what a seller can accept. SOP 50 10 8.1, the version in effect from October 1, 2026, says: "Seller earnouts are prohibited; however, buyer rebates based on business performance are allowed" (SBA). Seller debt counts toward the buyer's equity injection only if it is "subordinated to the Lender and on full standby (no payments of principal or interest for the term of the 7(a) loan)," and seller notes and other limited sources can supply no more than half of the required 10% injection on an initial acquisition. For an initial acquisition priced at $3 million or more, the lender must obtain a quality of earnings report on top of the business valuation, and the seller can stay on as a consultant for no more than 24 months.

For the seller, that means three LOI checks. An earnout in an SBA buyer's LOI won't survive the lender. A standby note means no payments for the life of the loan, so value it accordingly. And the lender's QoE and approval need to fit inside exclusivity, so ask for the lender's name and a dated approval milestone.

What is a working capital peg, and how should the LOI handle it and cash-free, debt-free terms?

The working capital peg is the level of net working capital the buyer expects the business to deliver at closing; if closing working capital comes in below the peg, the price drops by the difference, dollar for dollar, and if it comes in above, the price usually rises by the same amount. Illustrative example: if monthly net working capital averages $800,000 over the trailing year but the buyer proposes a $1.0 million peg taken from your busiest month, you hand back about $200,000 at closing without anything in the business changing.

Write the method, not just the phrase. The LOI should say the deal is cash-free and debt-free, set the peg as the trailing 12-month average of monthly net working capital adjusted for seasonality and calculated under the same accounting principles as your financial statements, and list exactly what counts as debt. Leaving the peg "to be agreed in the definitive agreement" moves the argument to a moment when the buyer has exclusivity and you don't.

The adjustment is no longer optional in practice. SRS Acquiom's 2026 Working Capital Purchase Price Adjustment Study, covering more than 1,500 private-target acquisitions closed from 2020 through the third quarter of 2025, found purchase price adjustment provisions in 92% of deals; SRS's 2025 edition put the share at more than 90%, up from about 50% a decade earlier. And the ABA's 2025 study found a separate adjustment escrow in 58% of deals, the highest since it began tracking in 2006 (Goulston & Storrs summary).

For the CFO, three things to do before the LOI is signed:

1. Run the peg on 24 months of monthly balance sheets. Know the average, the seasonal low and the seasonal high, so you can spot a buyer who proposes a peak month as "normal."
2. Pre-agree the debt-like list. Deferred revenue, accrued but unpaid bonuses, customer deposits, unpaid pre-closing income taxes and deferred capex are the items buyers most often add later. Decide which you accept and write the list down.
3. Name the dispute mechanism. An independent accountant deciding only the disputed items, on a fixed timetable, keeps a true-up from turning into a second negotiation.

The full mechanics of the peg, the true-up and the debt schedule are in our financial due diligence guide, and a sell-side quality of earnings report is the strongest evidence you can bring to the peg conversation.

How long should LOI exclusivity be, and what should end it early?

For a seller whose documents are ready, 45 to 60 days of exclusivity is usually enough for confirmatory diligence and a first draft of the purchase agreement. Agree to more only in exchange for dated milestones, never with automatic renewal, and make exclusivity end immediately if the buyer proposes a lower price or a worse structure. That is practitioner judgment rather than a statistic, and the right length depends on the buyer's financing and approvals.

Exclusivity is a slice of the process, not all of it. Deals on Peony took about 7.9 months on average from start to close in the Q3 2026 edition of our State of M&A Data Rooms report, and Datasite reported a 170-day median for diligence on its own platform in the same quarter. If the buyer needs the whole process inside exclusivity, that is a sign the diligence scope is too open.

What legitimately lengthens the window:

The milestone schedule that keeps exclusivity honest looks like this:

• Day 5: buyer delivers its full request list and names its QoE, legal and any lender.
• Day 15: management meetings complete; QoE fieldwork started.
• Day 25: first draft of the purchase agreement circulated (ideally by your counsel).
• Day 35: financing commitment or lender approval in hand.
• Day 45: diligence complete; buyer confirms the LOI price and structure in writing.
• Extensions: only by mutual written consent, in short increments, and only if the buyer has met every earlier milestone.

And the triggers that should end exclusivity early: a missed milestone, any proposed reduction in price or cash at close, any new condition, or the buyer's lender or committee declining.

What diligence scope and timetable should the LOI set?

Confirmatory, listed and dated. The LOI should name the workstreams the buyer will run (financial, tax, legal, commercial, IT and any environmental), say which third-party reports it will commission, give a date for the request list and a target signing date, and describe remaining diligence as confirmatory of what the buyer has already seen. A condition that diligence be "satisfactory to buyer in its sole discretion" with no scope or end date is a free option to walk or reprice.

How long from a signed LOI to closing? Plan on roughly two to four months for a lower middle market deal: the exclusivity window, which commonly spans 30 to 60 days according to Baker McKenzie's guide to US private M&A, plus drafting of the purchase agreement and any gap between signing and closing. A deal that must file under the HSR Act adds the FTC's 30-day waiting period after filing unless it is ended early, and third-party consents or an SBA lender's own process can add weeks.

Three conditions to read closely:

• Financing. "Subject to financing" with no committed source turns the LOI into a call option. Ask for committed equity, a lender term sheet or, for an SBA buyer, a lender pre-qualification.
• Customer and employee contact. Buyers will want to speak to key customers. Agree that it happens late, with you present, and only after the price is confirmed.
• Approvals. "Subject to investment committee approval" needs a date.

Preparing the documents themselves is a separate job, covered in how to prepare for due diligence and the due diligence data room checklist; if you plan to commission your own reports first, see sell-side due diligence.

What information should a seller release before the LOI, and what only after?

Release enough for a buyer to price the business before the LOI, and hold back anything that would hurt you if the deal died until after it. Before: the CIM, annual and monthly financials, an anonymized customer concentration table and a headcount summary. After: contracts, customer names, payroll, pricing and IP detail, to the winning buyer only, and to a competitor only through a clean team.

Gating is now the norm: 62% of data rooms on Peony sat behind an NDA gate in the Q3 2026 edition of our data. When the buyer is a competitor, competitively sensitive detail should go to a clean team of outside advisors who report only aggregated findings, which also limits gun-jumping risk under the HSR Act and Section 1 of the Sherman Act; our clean team data room guide shows how to set one up. And write information access into the LOI itself: who on the buyer's side gets access, when management meetings happen, and that the buyer won't contact your customers, suppliers or employees without consent. The CIM guide covers what the pre-LOI memo should contain.

How do you see which bidder is serious before you grant exclusivity?

Look at what each bidder actually read. In a Peony data room, page-level analytics, included on every plan, show which bidder group opened the financials, how long they spent on each page and who never got past the CIM, and the Q&A shows whose questions are confirmatory and whose are still exploratory. A buyer with a high headline whose team hasn't opened your monthly numbers hasn't priced your business yet, and that gap tends to come back later as a retrade. Our guide to using data room analytics to spot serious buyers shows the patterns.

How the LOI stage runs in Peony:

• One room, two tiers. Put pre-LOI material and post-LOI material in separate folders, and give each bidder its own visitor group. Group permissions and folder- and file-level access (Data Room plan) let you open the confirmatory tier to the winning buyer with one change, and revoke access for bidders who drop out.
• A gate on every link. An NDA gate sits in front of the room: a view-and-acknowledge NDA from Business, and a digitally signed NDA with an audit record on Data Room.
• Control after the click. Download prevention and screenshot protection from Business, and dynamic watermarks on Data Room that stamp the viewer's identity on every page, so a leaked page traces back to its source.
• Answers that cite the room. In Visitor Q&A (Data Room plan), AI drafts a cited first answer to each bidder question from the room's own documents; your team reviews and edits, and nothing reaches the bidder until you publish it. Deal Team adds expert and approver routing. You can also switch AI document Q&A on or off per visitor group, so a bidder can interrogate the documents with page-level citations, and document content is not used to train any model.
• A room that's ready on day one of exclusivity. AI room generation proposes a folder structure from a one-line deal description, and Index documents numbers every folder and file (1, 1.1, 1.2) so both sides can say "open 2.3." Peony has no built-in request-list tracker; a buyer's request list maps onto the numbered index instead.

What it costs and where Peony stops. Business is $30, Data Room $52 and Deal Team $64 (minimum 4 admins) per admin per month billed yearly ($44, $75 and $89 monthly), and viewers are unlimited and free. Most sellers at the LOI stage need Data Room, for group permissions, the signed NDA and watermarks. Peony keeps a full audit trail on Data Room and provides a full copy of a visitor's audit trail on request; the analytics CSV export is self-serve from Business. Peony is trusted by 250+ M&A advisors, including Jefferies and Bank of America, and is SOC 2 Type II-ready and ISO 27001-ready, with both audits underway. If you are selling above $500 million and the buyer's bank or counsel requires Datasite or Intralinks, run the room there. Start now

What is the difference between an IOI and an LOI?

An indication of interest (IOI) is an early, non-exclusive price range that lets you choose who goes into the next round; a letter of intent (LOI) is a single offer with a structure, a timetable and usually binding exclusivity. You collect several IOIs and sign one LOI, which is why the negotiating belongs between the two.

If you're running a competitive process, the round structure is covered in our guide to the M&A auction process; the whole sale from preparation to closing is in how to sell a company.

What are the red flags in an LOI?

The red flags are the terms that let a buyer reprice after you've lost your alternatives. Score each draft against this table; anything marked high severity should be fixed before signing, not after.

How do you compare two or more LOIs?

Run each LOI through the Net Proceeds Ladder, then score how likely each buyer is to close at that number. Compare cash at close plus risk-weighted later money, not headline price. A lower all-cash offer from a buyer who has read your financials and has committed money often beats a higher headline full of later money and open conditions.

Start with risk-weighted value: cash at close, plus each later payment multiplied by your own probability of receiving it. Use your advisor's judgment for the probabilities, with one external anchor: SRS Acquiom's 2026 earnout report found sellers collected about 21 cents of each potential earnout dollar on deals closed from 2021 to mid-2024. Then score certainty with the LOI Certainty Score, our seven-factor scorecard (0 to 2 points each, 14 maximum):

Use the score as a tiebreaker against risk-weighted value, not a replacement for it. A bidder scoring 12 at a slightly lower value is often the better LOI than one scoring 6 at a higher value. With a median of 5.5 bidders per room on Peony, most sellers have options, so before you sign one, tell the runner-up what it would take and ask for its best terms. Once you sign, you can't.

Who should review an LOI before you sign it?

At minimum, an M&A attorney and a CPA or tax advisor, both engaged before the draft arrives, plus your banker or broker if you have one. Each reads a different part of the letter.

Valuation support for the number itself is in our guide to M&A valuation methods, and longer-run preparation is in business exit planning.

The seller's LOI checklist: lock it, set the method, or leave it for the purchase agreement

Use this as the final pass on a draft LOI. "Lock" means the term is fixed in the LOI. "Method" means the LOI sets how the number will be calculated. "Defer" means it can wait for the purchase agreement, as long as the LOI doesn't contradict it.

FAQ

What should a seller negotiate before signing a letter of intent?

Negotiate everything that sets your net proceeds or your exit options, because exclusivity removes your alternatives on the day you sign. That means the split between cash at close and later money (seller note, earnout, rollover), the working capital peg method, what counts as debt, escrow size and duration, exclusivity length with a hard end date and milestones, the diligence scope and timetable, and a list of which sections bind. Reps, indemnity detail and disclosure schedules can wait for the purchase agreement; the economics cannot.

Is an LOI legally binding on the seller, and can the buyer back out?

Usually the price and deal terms are non-binding, so either side can walk away before a purchase agreement is signed, and a buyer can propose a lower price. The clauses marked binding, typically exclusivity, confidentiality, expenses and governing law, are enforceable from signature. Watch any promise to negotiate in good faith: in SIGA v. PharmAthene the Delaware Supreme Court held such a promise enforceable and allowed expectation damages. In Davenport v. Toro (Del. Super. Ct., October 27, 2026) the court found a breach of a binding exclusivity clause but awarded no damages, because the LOI disclaimed its economic terms and the claimant sought only expectation damages.

I own a $15M company and the buyer wants 90 days of exclusivity. How long should LOI exclusivity be?

In practice, a seller with a ready data room can give 45 to 60 days, enough for confirmatory diligence and a first draft of the purchase agreement; accept 90 only with dated milestones and no automatic renewal. Make exclusivity end early if the buyer misses a milestone or proposes a lower price. Before granting it, check engagement: Peony page-level analytics, on every plan, show whether the buyer's team has actually read your financials. Deals on Peony took about 7.9 months on average from start to close in Q3 2026, so exclusivity is a slice of the process, not all of it.

What is the difference between headline price and net proceeds when selling a business?

Headline price is the enterprise value in the LOI; net proceeds are what reaches your account. On a cash-free, debt-free deal you subtract funded debt, debt-like items such as deferred revenue and accrued bonuses, any working capital shortfall against the peg, transaction fees, the escrow and holdback, the deferred pieces (seller note, earnout, rollover) and the tax due for the year of sale. Depreciation recapture is taxed in the year of sale even on an installment sale, per IRS Publication 537. Ask your CPA to run every LOI through that ladder before comparing offers.

I have two LOIs: a higher one with an earnout and a seller note, and a lower all-cash one. How do I compare them?

Compare cash at close and risk-weighted later money, not headline price. Discount the earnout hard: SRS Acquiom's 2026 earnout report found sellers collected about 21 cents of each potential earnout dollar on deals closed from 2021 to mid-2024. Haircut the seller note for the buyer's credit and subordination, and treat rollover as illiquid equity. Then score the certainty of closing: committed financing, a confirmatory diligence scope, a defined peg and a short exclusivity. A lower all-cash offer from a buyer who has read your financials often beats a higher headline with open conditions. Ask the runner-up for its best terms before you sign.

How much escrow or holdback should a seller expect in 2026?

SRS Acquiom's 2026 Deal Terms Study found escrow or a holdback in 88% of 2025 private-target deals. Without representations and warranties insurance (RWI) the median escrow was 10.0% of transaction value; with RWI it was 2.8%. The ABA's 2025 Private Target Deal Points Study found a separate purchase price adjustment escrow in 58% of deals. Put the percentage, the release date and whether the escrow is the buyer's sole recourse into the LOI, and if the buyer is buying RWI, push for an escrow nearer the RWI median.

As the CFO advising the owner, how should we set the working capital peg in the LOI?

Write the method into the LOI instead of leaving the peg to be agreed: normally the trailing 12-month average of monthly net working capital, adjusted for seasonality, calculated under the same accounting principles as the financial statements and excluding cash, debt and income taxes. Run the calculation on 24 months of balance sheets before signing so you know the range. SRS Acquiom's 2026 working capital study found these adjustments in more than 90% of transactions. Also agree how a disputed true-up is settled, usually by an independent accountant.

What should a seller share with buyers before the LOI, and what only after?

Before the LOI, share what a buyer needs to price the business: the CIM, annual and monthly financials, an anonymized customer concentration table and a headcount summary. After it, open contracts, customer names, payroll and pricing to the winning buyer only, and route competitively sensitive data for a competitor through a clean team. Peony runs both tiers in one room: group permissions and folder-level access (Data Room plan, $52 per admin per month billed yearly) keep each tier separate, every link can sit behind an NDA gate, and dynamic watermarks stamp each viewer's identity on every page.

What is the difference between an IOI and an LOI?

An indication of interest is an early, non-exclusive price range, sent after a buyer reads the CIM, that lets the seller choose who goes into the next round. A letter of intent comes after management meetings and data room access: one price, a defined structure, a timetable and usually binding exclusivity. Several buyers submit IOIs; you sign one LOI. The IOI tells you who is serious and the LOI decides how much leverage you keep, so most of the negotiating belongs between the two.

What are the red flags in a letter of intent for a seller?

The biggest red flags are terms that let the buyer reprice after you lose your alternatives: exclusivity that renews automatically or has no end date, a working capital peg to be agreed later, a price stated as up to a number or subject to confirming EBITDA, a financing contingency without committed funds, diligence that must satisfy the buyer in its sole discretion, and permission to contact your customers or employees. An undefined earnout, and an escrow far above the 2.8% RWI median when the buyer is buying RWI, come close behind.

Who should review an LOI before the seller signs it?

At minimum, an M&A attorney and a CPA or tax advisor, engaged before the draft arrives. The attorney checks which sections bind, exclusivity, any duty to negotiate in good faith, closing conditions and governing law. The CPA models net proceeds after tax, compares asset and stock sale treatment (both buyer and seller file IRS Form 8594 in an asset sale) and tests the peg and debt definitions. Add your banker or broker to benchmark the LOI against the other bids, and a sell-side quality of earnings provider if one is engaged.

My buyer is using an SBA 7(a) loan. Can the LOI include an earnout or a seller note?

Not an earnout: SBA SOP 50 10 8.1, effective October 1, 2026, states that seller earnouts are prohibited in change-of-ownership deals, though buyer rebates are allowed. A seller note is allowed, but it counts toward the buyer's 10% equity injection only if it is subordinated and on full standby, with no principal or interest paid for the term of the 7(a) loan, and limited sources can supply no more than half of the injection. For an initial acquisition priced at $3 million or more, the lender must also obtain a quality of earnings report, so build that into the exclusivity timeline.

Related Resources

• State of M&A Data Rooms: our Q3 2026 dataset of 733 M&A transactions from $1M to $500M, including time to close and bidders per room
• Independent Sponsor LOI Playbook: the buyer's side of the LOI, from exclusivity asks to deposits
• How to Structure an Earnout: metric, cap, covenants and acceleration, clause by clause
• Rolling Equity in M&A Deals: how rollover is valued, taxed and protected
• Financial Due Diligence: the working capital peg, the true-up and debt-like items in full
• Quality of Earnings: which add-backs survive and why a sell-side QoE helps the peg
• Rep and Warranty Insurance: how RWI changes escrow and indemnity
• Sell-Side Due Diligence: commissioning your own reports before buyers do
• Clean Team Data Room: sharing competitively sensitive data with a competitor buyer
• Data Room Analytics to Spot Serious Buyers: reading engagement before you grant exclusivity