Can the due diligence period be extended?

Nothing in the sources below sets a standard right to extra time, so the answer comes from your own documents. The deadline is a term of what you and the seller signed, so check what that document says about changing it. Find where the date is written, find out whether it is binding, and ask early if you need more time.

Where the deadline sits

BDC says a letter of intent’s provisions generally include a timeline for the due diligence. It also says a letter of intent is not intended to be fully binding unless otherwise expressly stipulated. If you later sign a purchase agreement, check the dates it sets. BDC notes that in most acquisitions there is a period between signing the purchase agreement and closing, the date you take possession of the business.

Exclusivity is a separate clock

BDC lists the duration of exclusivity among a letter of intent’s clauses: the period in which the seller agrees not to solicit or consider other offers without first speaking with the buyer, and the penalties for breaching that commitment. Where the letter so provides, it creates binding obligations, particularly on confidentiality and exclusivity. Check whether exclusivity ends on the same date as diligence. If you extend one and not the other, the seller may be free to talk to other buyers while you are still reviewing.

Closing conditions after signing

BDC describes the closing conditions as undertakings the vendor agrees to complete during the period before closing so that the deal can close. Read which conditions have dates, who can waive them, and what happens if a date is missed. A lawyer can tell you whether an extension needs a written amendment and how it affects any deposit.

Asking for more time

• Ask before the date, not after, and say in writing which documents or searches are still outstanding.
• Ask for the extension and any matching exclusivity change in one signed document.
• Ask a lawyer to confirm what the extension does to deposits, conditions and closing dates.

For what to review while the clock runs, see how to do due diligence when buying a business in Ontario.