Exclusivity Period
The period during which the seller commits to negotiating exclusively with a single buyer, generally after signing a letter of intent. Typically 60 to 90 days.
Definition
Exclusivity — or the exclusivity period — is a contractual commitment by which the seller agrees to negotiate only with a designated buyer for a set duration. This commitment is usually written into the letter of intent (LOI) and takes effect as soon as it’s signed.
In French-language Quebec documentation, you’ll see exclusivité or période d’exclusivité used for the same concept.
During this period, the seller can’t solicit, receive, or consider other offers. The goal is to give the buyer the time and security needed to complete due diligence and finalize the purchase agreement without fearing that the ground will be pulled from under them.
Why exclusivity matters in a business sale
Exclusivity is one of the most strategic points in the negotiation for a Quebec SME seller. By granting exclusivity, you temporarily give up your best negotiation lever: competition among potential buyers.
It’s a necessary trade-off — few serious buyers will invest tens of thousands of dollars in professional fees (lawyers, accountants, valuators) without assurance that you won’t sell to someone else in the meantime.
Duration is critical. A period that’s too long (more than 120 days) gives the buyer an excessive advantage, letting them slow the process down to renegotiate downward.
A period that’s too short (less than 45 days) may not be enough for thorough due diligence, which leads to extension requests or the transaction being abandoned. The 60 to 90 day range is the most common for Quebec SMEs.
It’s also essential to build in exit conditions: if the buyer doesn’t meet the agreed-upon steps (document submissions, financing, etc.), the seller should be able to end exclusivity without penalty.
A good broker will negotiate these protections upfront.
What every seller should know
- Never sign an exclusivity agreement before receiving a letter of intent with a clear price and clear terms — exclusivity has to be earned.
- Negotiate the duration: aim for 60 to 90 days with the possibility of a 30-day extension under specific conditions.
- Include mandatory milestones — if the buyer isn’t making progress, exclusivity automatically ends.
- Before granting exclusivity, make sure you’ve tested the market enough to know that this offer is competitive.