What if I get a better offer the day after signing a letter of intent?

A better offer after you sign is a hard moment, and the right answer is in the document you signed, not in how the new offer compares. This page covers what to read and do. It does not tell you whether to stay with the first buyer.

The exclusivity clause comes first

BDC defines exclusivity as the period during which the seller agrees not to solicit or consider other offers without first speaking with the buyer. It adds that the letter of intent can include the duration of exclusivity and the penalties for breaching the commitment. Note the wording. A clause that bars you from considering offers is wider than one that bars you from soliciting them, and a clause that requires you to speak to the buyer first is different again.

What the rest of the letter does not bind

BDC says a letter of intent is not intended to be fully binding unless it says so, but that it can bind the parties on confidentiality and exclusivity. So the price and structure may be non-binding while the exclusivity clause is not. If there is no exclusivity clause in your letter, ask your lawyer what, if anything, limits you.

Before you answer the new buyer

• Do not reply with detail until a lawyer has read the exclusivity and confidentiality clauses.
• Check whether the clause requires you to tell the first buyer about the approach.
• Check whether the exclusivity period has a fixed end date and whether it can be cut short.
• Find out what the clause says happens if you breach it.

If exclusivity is still running, you could ask the new buyer whether it is willing to wait until the period ends. You could tell the new buyer that you are in a process with exclusivity and will be in touch when it ends. Confirm that wording with your lawyer first.