> I was advised that 50% of signed LOIs actually close. I bet it’s less. You will see the LOI and dream of trading stress for riches. Remember: Less than 50% chance of closing.
100%
Which is why I hate that exclusivity is industry standard.
It feels exploitative that acquirers can demand exclusivity in a deal when the chances of it closing are less than 80%.
Imagine selling a house and taking it off the market because you got an offer with a 50% chance of actually closing 3 months later.
Even worse, most acquirers will say “nope” if you ask them to cover your legal fees if they back out of the deal.
This happens because sellers of companies only sell 1 or 2 companies in their lifetime, while buyers of companies typically do dozens and dozens of transactions. There’s an extreme power imbalance in favor of acquirers. Most sellers learn these lessons the hard way.
100%
Which is why I hate that exclusivity is industry standard.
It feels exploitative that acquirers can demand exclusivity in a deal when the chances of it closing are less than 80%.
Imagine selling a house and taking it off the market because you got an offer with a 50% chance of actually closing 3 months later.
Even worse, most acquirers will say “nope” if you ask them to cover your legal fees if they back out of the deal.
This happens because sellers of companies only sell 1 or 2 companies in their lifetime, while buyers of companies typically do dozens and dozens of transactions. There’s an extreme power imbalance in favor of acquirers. Most sellers learn these lessons the hard way.