If you are buying a business, the process becomes expensive and tedious once the letter of intent is signed. For this reason, I recommend all buyers include a “No Shop” provision in their LOI. This provision prevents the seller from going behind your back and finding other suitors while you are busy with due diligence and financing.
Sellers should find this clause acceptable, but be prepared for them to counter with a time limit for the no shop. The seller doesn’t want to be tied up forever and will hope the time constraint gets you going faster so that the deal won’t fizzle.
Ryan RobertsPartner
Ryan Roberts is a startup and venture capital attorney and partner at Roberts Zimmerman PLLC with more than two decades of experience advising high‑growth startups and venture capital investors. He is the author of Acceleration: What All Entrepreneurs Must Know About Startup Law and StartupLawyer.com
