The right LOI exclusivity.

Sixty days. That is the right exclusivity period on an LOI for a lower-middle-market independent sponsor deal, with a 30-day extension you control.

Ninety days is too long. Forty-five days is too short. Sixty plus thirty, with the extension as a sponsor right, is the sequence that closes the most deals at the cleanest terms.

Ninety days is too long for three reasons.

First, the seller's leverage rebuilds. Sellers who agree to ninety days think the deal is more certain than it is. By day sixty, if the deal has not progressed cleanly, the seller starts wondering if they should be talking to other buyers.

Second, the diligence team gets soft. A QofE engagement that has 90 days of runway feels different than one with 60 days. The provider stretches the work. The independent sponsor's leverage to push back on diligence findings is highest in the first 30 days and lowest in the last 15.

Third, the capital partners hear about the deal from someone else. A deal in 90-day exclusivity is a deal that has been around for at least 90 days. Family offices that the independent sponsor has not yet pitched will hear about the deal from their lawyer, their accountant, or their other LP relationships. By the time the independent sponsor gets to those LPs, the deal feels secondhand.

Forty-five days is too short for two reasons.

First, R&W carrier diligence alone takes that long, and the lender bake-off needs space.

Second, the lender bake-off needs space. A real bake-off (three to five lenders, each producing a term sheet) needs 30 to 45 days. Inside a 45-day total exclusivity window, the bake-off and the negotiation cannot both happen.

Sixty days plus a 30-day extension, with the extension as a sponsor right.

The 60 days covers the QofE, the R&W binding, the lender bake-off, and the LP soft-circling. The 30-day extension covers the integration of all those workstreams into a single signing-and-close.

The extension as a sponsor right is the key. If the extension requires mutual agreement, the seller has new leverage in the last week of the 60-day window. If the extension is a sponsor right (typically triggered by 5 to 10 days written notice before the original expiration), the seller has no leverage. The deal proceeds.

Two more notes. If the seller is being represented by a banker, the banker often pushes for shorter exclusivity. Push back. If the seller has been on market for more than six months and the deal has stalled with two prior LOIs that did not close, the exclusivity should be 75 days with no extension.

Negotiate this in the LOI itself, not in a side letter.