An exclusivity period is the window, set out in a letter of intent, during which a seller agrees not to negotiate with or solicit offers from any other buyer while the named buyer completes due diligence and works toward a definitive agreement.
Most of an Ontario LOI’s core commercial terms — price, structure, headline deal shape — are deliberately non-binding, so that neither side is locked into completing on those terms if diligence changes the picture. Exclusivity is the exception: it is almost always drafted as binding, because the buyer will not spend real money on legal and financial diligence without confidence that the seller cannot simultaneously shop the deal to a competing bidder. Typical duration runs thirty to sixty days for a smaller transaction and sixty to ninety days for a larger or more complex one, with the tension built into the negotiation itself: the seller wants the window short, and the buyer wants enough time to actually finish proper diligence rather than rush it against a deadline.
A properly drafted exclusivity clause also carries its own exit: an expiry date, so that either side can walk away without consequence if a definitive agreement has not been signed by then. Deavo, a Canadian business-sale platform, frames the wider transaction timeline in similarly illustrative terms — from several months to well over a year from listing to close, depending on financing speed and deal complexity — which is the backdrop against which a buyer and seller size the exclusivity window: long enough to cover the diligence and financing workstreams that actually drive the timeline, not an arbitrary round number.
A private equity buyer signs an LOI for a $15 million platform acquisition and requests seventy-five days of exclusivity, matched to three parallel workstreams: financial and legal diligence, environmental review, and third-party debt financing. The clause includes an outside date of day seventy-five, after which the seller is free to talk to other buyers if no definitive agreement has been signed. Because the buyer has committed real diligence spend against that window, the LOI also carries a break fee payable if the seller breaches exclusivity before the outside date arrives.
See also: No-shop covenant · Break fee · Definitive agreement.
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