What Is Exclusivity Period? | Agency M&A Definition
An exclusivity period is a defined timeframe during which a seller agrees not to negotiate with, solicit, or entertain offers from any other potential buyers. Also called a “no-shop clause,” it gives the prospective buyer a window to complete due diligence and finalize deal terms without competitive pressure. Exclusivity periods are typically outlined in the letter of intent and last anywhere from 30 to 120 days.
Exclusivity Period in Agency M&A
In marketing agency M&A, exclusivity periods are a critical negotiation point that balances seller leverage against buyer certainty. When selling a digital marketing agency, owners often resist long exclusivity windows because the moment word leaks that an agency is “in play,” it can unsettle clients and staff. Buyers, on the other hand, need adequate time to review client contracts, verify revenue retention, assess key person dependencies, and confirm that reported EBITDA margins hold up under scrutiny. For agencies with $1M-$3M in revenue, a 60-day exclusivity period is standard. Larger deals involving agencies north of $5M in revenue may warrant 90 days due to the complexity of client portfolios and multi-office operations. Sellers should negotiate clear milestones within the exclusivity window — for instance, requiring the buyer to complete financial due diligence within the first 30 days — so that the process does not stall indefinitely. A well-drafted exclusivity clause will also include a termination trigger if the buyer fails to meet agreed timelines, returning the seller’s freedom to pursue other offers.
How Exclusivity Period Affects Agency Valuation
Exclusivity periods indirectly affect valuation by shaping negotiation dynamics. A longer exclusivity window can erode seller leverage, particularly if the agency’s performance dips during the period or if market conditions shift. Conversely, a tightly managed exclusivity period with clear deadlines can maintain competitive tension and protect the seller’s asking price. In practice, agencies that enter exclusivity after running a competitive process with multiple interested buyers tend to achieve valuations 0.5x-1.0x higher on their EBITDA multiple than those that negotiate exclusively with a single buyer from the outset. The exclusivity period also affects deal certainty, which buyers often price into their offer.
Example
A content marketing agency with $2.4M in revenue and $480,000 in EBITDA receives a letter of intent from a strategic buyer offering 6x EBITDA ($2.88M). The LOI includes a 75-day exclusivity period. The seller negotiates it down to 60 days with a milestone requiring completed financial due diligence by day 30. At day 28, the buyer requests a 30-day extension citing delays in reviewing 47 active client contracts. The seller agrees to a 15-day extension only, preserving leverage and keeping the deal on track to close within 75 days total.
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