What is No-Shop Clause (Exclusivity)?
The Short Answer
No-Shop Clause (Exclusivity) explained simply
A No-Shop Clause is a common legal term in business sales. It means that once you, as a seller, sign a Letter of Intent (LOI) with a buyer, you agree not to talk to other potential buyers for a set amount of time. This period is usually for the buyer to do their homework (due diligence) and get everything ready to close the deal. It gives the buyer peace of mind that you are committed to them during this phase.
Real-World Example
The Bakery Sale
Imagine you own a bakery and get a great offer from a buyer. You both sign an LOI that includes a 60-day No-Shop Clause. For those 60 days, you cannot entertain offers from other interested parties, even if they offer more money. The buyer uses this time to review your books, inspect the property, and secure financing.
Why this matters
This clause is important because it gives the buyer time to do their due diligence without worrying about another buyer swooping in. For sellers, it means you are serious about the current offer and are giving that buyer exclusive attention. It helps move the deal forward by creating a focused negotiation period.
Always understand the length and terms of a No-Shop Clause before signing. It locks you into a period of exclusive negotiation, so make sure you are comfortable with the buyer and their offer.
Always understand the length and terms of a No-Shop Clause before signing. It locks you into a period of exclusive negotiation, so make sure you are comfortable with the buyer and their offer.
Need expert guidance?
Don't navigate the buying process alone. Connect with a verified expert to help you find and close the right deal.
