What happens when LOI exclusivity expires, and what can a seller do next?

What can a seller do when LOI exclusivity expires?

When exclusivity lapses, the seller is free of the no-shop only if the letter of intent and any NDA say so. The practical options are to extend exclusivity on new terms, reopen talks with backup bidders, or pursue other sources of proceeds, such as licensing company data for AI training. Read the LOI and NDA language first, because confidentiality and non-solicit terms often outlast the exclusivity period.

This page is for M&A advisors who carry clients through the weeks after a signed LOI. It is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

What does the lapse actually change?

The LOI usually states the exclusivity period, any automatic extension and what counts as a breach. Exclusivity length, extension mechanics and the remedy for breach are negotiated points, not a fixed standard, so the LOI in front of you governs.

Should the seller extend exclusivity?

Extend only for a reason, a time limit and something in return. Use the 3-condition extension rule:

1. Progress: the buyer has met the diligence milestones it promised, such as financing confirmation and a draft purchase agreement.
2. Specific delay: the cause is identifiable, such as a third-party consent or a quality of earnings report.
3. Price protection: the buyer confirms the headline terms in writing and agrees to a shorter extension.

If one condition is missing, a short extension with a defined end date is safer than an open one. Reasons diligence drags are covered in how long does due diligence take and the final stage in confirmatory due diligence.

Can the seller talk to other buyers after expiry?

Often yes, but the answer depends on three documents: the LOI, the NDA and any standstill or non-solicit. Counsel should confirm each. A seller who reopens talks should also manage information carefully: backup bidders should receive no more than they had before, as discussed in what to share with buyers before an LOI.

How do you re-engage backup bidders?

Use a short re-engagement sequence:

1. Confirm in writing that exclusivity has ended and what the LOI still restricts.
2. Contact the top two backup bidders with a neutral message and a new deadline.
3. Offer a refresh of the information they previously saw, not new sensitive data.
4. Set a response date, then decide whether to run both tracks.

Where does a data license fit?

A data license is a separate transaction from the sale of the company. Once exclusivity has lapsed, an advisor can raise it as another source of proceeds, or as something the owner might pursue before closing, subject to whatever the LOI and NDA still say. Check whether the LOI restricts transactions outside the ordinary course, and whether an exclusive AI-training term would need disclosure to the buyer.

Any license is a separate contract that leaves ownership with the company and binds it only after it signs. Eligibility starts at 50+ full-time employees at peak (contractors excluded) plus documented history and licensing rights; the company fit checker gives a preliminary screen and who qualifies has the rest.

What does the advisor do for site and security readiness?

If the sale restarts, buyers will repeat tours and security reviews. Keep the site visit preparation checklist and the cybersecurity checklist current so a restart is fast.

What would a partner earn, and who is it for?

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company, and a reward becomes payable only after the buyer pays and SourceX receives its fee. Rewards are not guaranteed. The partner reward is a share of SourceX's fee and is never deducted from what the company receives. Check your own firm's rules on referral fees and disclosure before you take part. Advisor-specific context is on the M&A advisor page, and backup bidders for the sale itself are a different list from data buyers, as the buyer list guide explains.

When is this not the right moment?

Do not raise it while the exclusive buyer is still in confirmatory diligence unless the LOI allows it, and do not raise it for companies below the size baseline.

Next step

Register as a partner to get a referral link for clients whose sale has stalled. Companies can apply at sourcex.si/apply.