An exclusivity period is the defined window during which the seller cannot engage with alternative buyers, typically running from term sheet through signing.
Plain definition
An exclusivity period is the defined window of time during which the seller is contractually prohibited from soliciting, negotiating with, or accepting offers from alternative buyers. It typically begins at the term sheet stage, runs through definitive agreement signing, and sometimes extends through closing under continuing no-shop language.
The length of the exclusivity period reflects the buyer's confidence in their ability to close. Longer periods favor the buyer by removing competition. Shorter periods favor the seller by forcing a faster pace and preserving optionality. Typical ranges are 30 to 90 days at term sheet, with mechanisms for extension if diligence runs long.
An exclusivity period is the seller's commitment to one buyer at a time. The duration decides how much price competition the seller can preserve while the buyer works.
What goes wrong
The seller agreed to 90 days exclusivity. The buyer used the period to slow-walk diligence, raise issues, and renegotiate terms. By the time exclusivity expired, the seller had lost momentum, lost time, and lost the original alternative bidders. The period had been the buyer's most valuable asset.
The exclusivity period nears expiration. The buyer requests a 30-day extension citing diligence complexity. The seller agrees. The extension is requested again 30 days later. The seller agrees again. By the third extension, the seller has been exclusive for six months and has no other live conversation.
The exclusivity provision has a carve-out for unsolicited offers above a defined threshold. An offer arrives. It is unsolicited but lacks documentation the carve-out requires. The seller cannot engage with it during exclusivity even though the spirit of the carve-out covered the situation.
The term sheet is silent on exclusivity. The buyer behaves as if the seller has agreed to exclusivity anyway. Diligence requests, working sessions, and integration discussions all proceed under the buyer's assumption. By the time the seller realizes there is no actual restriction, the operating posture has already given the buyer the same effect.
Founder questions
Bigger picture
The no-shop is the contractual mechanism that enforces exclusivity. The two terms overlap in practical use and often appear together in the same agreement.
Related structure Breakup FeeExclusivity defines the window. The breakup fee defines what it costs to step outside that window. The two together shape how reversible the seller's commitment is.
Related structure MAC ClauseExclusivity locks the seller in. The MAC clause is the buyer's matched ability to walk under defined conditions. The two define what each side can do during the deal window.
Related reading
The decision frame for whether the deal lock-in inside an offer is worth the headline number.
Related readingThe decision frame that shapes whether exclusivity is worth granting at all.
Related readingWhy capital and exit decisions made early decide what room the seller has when offers arrive.
Bring the term sheet, the proposed exclusivity language, and the timing of any other interested parties.