Exclusivity

In an M&A process, a bidder will regularly request a period of exclusivity in which to conclude the negotiations and due diligence. Under so-called negotiation exclusivity, the seller may not conduct parallel discussions with other interested parties. Under so-called completion exclusivity, the seller may not sell to any other party until the exclusivity period expires.

The topic of exclusivity is typically a very critical point in any M&A process. Sellers would rather not grant exclusivity at all, or prefer a completion exclusivity, so as not to become entirely dependent on a single buyer. Buyers push early in the process for genuine negotiation exclusivity to be sure that they are not incurring unnecessary costs during due diligence and contract preparation — and, of course, to weaken the seller’s negotiating position. Exclusivity is customary, but its precise design and timing depend on the deal and on the seller’s negotiating position.