Deal StructureNegotiation & Leverage
No-Shop Clause
Also known as: Exclusivity clause, exclusivity period, no-shop provision, no-shop agreement
The provision in a letter of intent that prevents the seller from negotiating with other buyers for a defined period. Once signed, the founder's only real leverage — the ability to walk — evaporates.
WHY IT MATTERS
Why it matters. The no-shop clause is the first structural move in the buyer's playbook. Once the founder signs exclusivity, every other interested buyer goes cold. The competitive tension that produced the strong LOI evaporates. The buyer knows it. The clause creates a psychological ratchet: every concession the buyer extracts during the exclusivity window makes the next one easier to justify, because walking away means losing everything already given up. Standard exclusivity runs 60–90 days with no break fee — meaning if the buyer walks, the founder absorbs all costs, lost time, and market exposure for nothing. Founder-favorable versions cap the window at 30–45 days, include a reverse break fee if the buyer exits without cause, and require milestone-based extensions tied to delivery of a draft purchase agreement.