---
title: "Exclusivity Period"
url: "https://mahouse.world/glossary/exclusivity-period"
type: "glossary term"
topic: "Deal process"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
published: "2026-08-10"
---

# Exclusivity Period

An exclusivity period is the time during which a seller agrees not to negotiate with, solicit or provide information to any other buyer, granted to one bidder so that it can spend on due diligence and drafting with some assurance the deal will not be sold from under it. It is the one binding clause in an otherwise non-binding letter of intent, and its length is a negotiation in itself.

**Also known as:** Exclusivity, No-shop, Lock-out period

## Key facts

- **Used at:** after heads of terms or a letter of intent, at the start of confirmatory diligence; sometimes, more narrowly, in a listed-company deal as a "no-shop" covenant
- **Binding:** yes — usually the only binding commercial term in the heads; breach gives the buyer a claim for its wasted costs, sometimes a fixed sum
- **Typical length:** four to eight weeks for a straightforward private deal; ten to twelve where regulatory approval or a carve-out complicates diligence; extendable by agreement, and often extended
- **Typical price:** the buyer's promise to proceed in good faith and, sometimes, a cost-cover payment if it walks without cause; the seller's alternative is to keep the auction open and give no exclusivity at all
- **Parties:** the seller and its shareholders (all of whom must be bound), the buyer, and the other bidders, who are told the process has paused

## How an exclusivity period works in practice

A bidder that has won the second round of an auction, or agreed a price in a bilateral negotiation, will now spend real money: accountants for the quality of earnings work, lawyers for the sale agreement, consultants for commercial and technology diligence — six figures for a mid-market deal. It will not spend it while the seller shops its offer to others. So it asks for exclusivity: a period in which the seller and its advisers deal with nobody else. The seller grants it because the alternative is a bidder who will not commit, and because a process that has run properly has already extracted the competitive tension the exclusivity now suspends.

The negotiation is over length and conditions. The buyer wants long enough to finish diligence and negotiate the agreement; the seller wants short enough that a buyer who slows down loses it. Sellers therefore tie exclusivity to milestones — a draft agreement by week three, diligence complete by week six — and let it lapse if they are missed. Buyers ask for automatic extensions if the delay is the seller's. The period often overruns, and the seller's leverage in the overrun is that the other bidders are a phone call away, which is weaker every week the process has been paused.

For a fintech deal, the regulatory approval sits outside exclusivity: it is applied for after signing, not before, and the exclusivity should not be sized to it.

## Example

A fund wins round two of a process for a payments company at €60m and asks for twelve weeks' exclusivity. The seller grants eight, conditional on the fund delivering a marked-up sale agreement by day 21 and completing financial diligence by day 42, with two-week extensions if the seller's data room is late. The fund spends €350,000 on diligence in the period. In week seven it proposes €54m, citing a customer concentration it had seen in the information memorandum. The seller refuses, exclusivity ends on day 56, and the seller returns to the round-two underbidder, who signs at €57m five weeks later. The fund's €350,000 is gone; had the seller granted twelve weeks with no milestones, it would have been negotiating from weakness in week eleven.

## Common mistakes

- Granting exclusivity before the price and the key terms are written down, so the period is spent negotiating what should already be agreed.
- Exclusivity without milestones, so the buyer controls the pace and the seller's alternatives go cold.
- Binding only the company and not its shareholders, who can then talk to whom they like.
- Buyers treating the period as an option to re-price rather than as a commitment to close at the agreed terms absent findings.
- Sellers telling the underbidders the process is over, rather than paused.

## Related terms

- [Heads of Terms](https://mahouse.world/glossary/heads-of-terms.md)
- [Letter of Intent](https://mahouse.world/glossary/letter-of-intent.md)
- [Break Fee](https://mahouse.world/glossary/break-fee.md)
- [Auction Process](https://mahouse.world/glossary/auction-process.md)
- [Due Diligence](https://mahouse.world/glossary/due-diligence.md)
- [Binding Offer](https://mahouse.world/glossary/binding-offer.md)

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov