Sunday, March 19, 2006

I am selling my business and one buyer has asked me to agree to a "No Shop" clause

A "No Shop" clause is part of a letter of intent in which a qualified buyer says he will pay "x, y and z" for your business, the deal will be completed by a stated date and AND the buyer wants the seller to take his business off the market and refrain from discussions with other potential buyers. Hence the term "No Shop".

It is a reasonable request from a buyer who has met past deadlines and commitments. It is not a reasonable request from a buyer who has shown signs of being unfocused, or is inexperienced, or needs multiple levels of approvals and financing to close the deal.

We recommend "no shop" periods be as short as possible. If a deal moves forward to closing at a reasonable place, the buyer and seller can agree to extend the no shop period.

1 comment:

star said...

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