From LOI to Closing: Navigating Competitive M&A with Practical Negotiation Strategies

  • April 21, 2025
  • 7 min read

Table of Contents

  • The LOI: Lay the Groundwork, Build the Leverage
  • Due Diligence: The Art of Holding Value
  • Structuring the Deal: Solve for Friction Points
  • Managing Competitive Heat Without Losing the Deal
  • Closing the Deal: Where Execution Matters Most
  • Final Thoughts: Strategy Wins When Execution Holds

Mergers and acquisitions aren’t just financial transactions—they’re intense, high-stakes journeys where strategy, emotion, and execution collide. Over the years advising founders, funds, and corporates, I’ve found the stretch from a signed Letter of Intent (LOI) to closing is where deals are made—or lost.


It’s no longer just about price. It’s about crafting a structure that holds up under pressure, managing competition without losing trust, and solving real-world problems that surface under diligence. In today’s competitive M&A landscape, sharp execution and creative dealmaking separate deals that close from those that fizzle out.


Below, I’ve distilled what works—from real-world deals where we had to earn every inch. Whether you're a founder, buyer, investor, or advisor, these strategies aim to help you navigate the pressure cooker from LOI to close.

The LOI: Lay the Groundwork, Build the Leverage

The LOI isn’t just a formality—it’s the deal’s blueprint and the seller’s last moment of real leverage. Once exclusivity starts, the buyer usually gains control of the timeline, information flow, and terms. That’s why I push clients to get as much locked in as possible—price, structure, key terms, even process deadlines.

In competitive processes, the LOI becomes a subtle pressure tool. In one deal, we advised a founder to delay exclusivity and keep a second bidder in play. The lead buyer noticed—and came back with a stronger price and tighter timeline. But I’ve also seen the opposite: a founder dragged two buyers too far into parallel discussions, both caught on, and the deal collapsed entirely.

Pro tip: If you’re the seller, aim for a 30–45 day exclusivity window. Buyers who are serious will sometimes offer extras—like a reverse breakup fee if they don’t close on time. One strategic acquirer did just that, signaling serious intent while reducing downside risk for the seller.

At this stage, clarity beats optimism. Don’t accept vague price language or fuzzy risk-sharing clauses. Every ambiguity is a chance for value to erode later.

What to Lock in at LOI Stage

  • Clear valuation basis (e.g., audited EBITDA or ARR)
  • Disclosed known risks and their treatment
  • Adjustment mechanics (caps, thresholds, earnout frameworks)
  • SPA submission and signing deadlines
  • Exclusivity terms—with conditional incentives, if possible

Due Diligence: The Art of Holding Value

This is where buyers stress-test their assumptions—and where deals often lose momentum or value.

Sellers often face what I call the “price chip”—buyers trying to shave value based on diligence discoveries. The fix starts before the LOI: know your weaknesses—sketchy financials, legal loose ends, or customer churn—and address them upfront. Disclosing issues early lets you negotiate from strength, not defense. If a cut comes up, dig into the reasoning. A real issue, like a lost key client, deserves a talk; a vague complaint doesn’t.

When diligence becomes a fishing expedition, the risk of “deal fatigue” skyrockets.
I’ve seen it play out both ways. In one deal, a buyer tried to push a 15% price cut after finding weak inventory accounting in two regions. The seller had mentioned it pre-LOI, but never documented it clearly. With no reference in the LOI, leverage tilted toward the buyer.

Contrast that with a growth equity round where a buyer flagged high churn risk in pre-paid ARR. Instead of slashing valuation, they proposed a partial earnout and convertible structure tied to net retention. The deal moved forward—risk shared, value mostly intact.

Speed also matters. Diligence that drags invites fatigue, overthinking, or market shocks. In a carve-out transaction, we built into the LOI a framework requiring the buyer to submit the first SPA draft within 30 days. That alone kept things on track.

Risk-Management Tools that Preserve Trust

  • Escrow for specific known risks
  • Holdbacks tied to earnout or performance
  • Rep & Warranty Insurance to limit legal exposure
  • Tight timelines to avoid open-ended diligence

Structuring the Deal: Solve for Friction Points

The finish line is rarely a straight path. Valuation gaps, funding constraints, or risk allocation disagreements can kill a deal—unless you structure creatively.

In one transaction, the seller pushed for a €60M headline valuation while the buyer wouldn’t go past €52M. The solution? €52M at closing, plus an €8M earnout triggered by hitting revenue milestones. The metric was binary, time-bound, and credible—no room for debate post-close.

In another deal, a family business agreed to seller financing—15% of the purchase price via a 5-year subordinated note at 7%. It reduced the buyer’s equity need and gave the seller a steady income stream, while signaling confidence in the business.

Equity rollovers—where founders retain a stake in the business—also align interests. In a PE-backed buyout, a founder rolled 20% of their equity into the newco, boosting trust and ensuring post-close involvement.

Sometimes, the cleanest bid wins, not the highest. One cross-border buyer won by offering to insure the reps and reduce the escrow. Lower risk, faster close, better outcome.

Creative Structuring Levers

  • Earnouts tied to clear, binary metrics
  • Seller financing (convertible or fixed-rate)
  • Equity rollovers (10–30%) to align incentives
  • Insurance in lieu of large escrows
  • Post-closing covenants instead of blocking conditions

Managing Competitive Heat Without Losing the Deal

M&A is human. Emotions, egos, and fatigue can derail even well-structured processes—especially when competition heats up.

I’ve seen founders overplay their hand and lose every bidder. I’ve also seen buyers win despite lower prices, just by showing consistency, speed, and emotional intelligence.

Advisors are key here. In one tense deal, we ran critical negotiations through intermediaries to avoid direct confrontation between a prickly founder and an impatient strategic. Cooler heads prevailed, and the deal got done.

If you’re a seller running a process, keep it credible and fair. Share updates evenly, host structured Q&A sessions, and resist showing favoritism too early. Once trust breaks, bidders walk.

If you’re a buyer, be the steady hand. Respond fast, communicate clearly, and keep your deal team consistent. In a hot process, professionalism can outweigh price.

Playbook for Managing Tension

  • Use intermediaries to buffer personality clashes
  • Maintain transparency across bidders
  • Use real—not artificial—timelines and deadlines
  • Reset tone with informal breaks when needed (coffee > conflict)

Closing the Deal: Where Execution Matters Most

Signing the SPA is a milestone, but closing is the win. The gap between sign and close is dangerous—new risks, shifting markets, and surprises can all derail momentum.

Buyers want closing conditions to protect themselves; sellers want speed and certainty. Balance is key. Limit walk-away rights to objective issues—like regulatory failure or a material customer loss—not vague “deterioration” language.

One last-minute deal almost died over a working capital adjustment. We’d defined the formula but hadn’t nailed down the dispute mechanism. Since then, I push for tight definitions, narrow dispute windows, and fallback arbitrators.

Sellers: don’t relax before the wire hits. Even small missteps—like late consents, missing IP transfers, or inconsistent signature blocks—can spark doubt.

Pre-Closing Checklist

  • Clear definitions of working capital and adjustment mechanics
  • Disclosure of late-breaking issues—with proposed solutions
  • Confirm all consents, approvals, and third-party actions
  • Have fallback plans for logistics (e.g., board approvals, notaries)
  • Keep pressure on all sides until funds hit the account

Final Thoughts: Strategy Wins When Execution Holds

Getting from LOI to closing in a competitive M&A deal is part art, part science. A rock-solid LOI sets you up, disciplined diligence protects value, creative structures bridge gaps, and sharp execution locks it in. Preparation, flexibility, and a dose of human connection make the difference. Here’s what I’ve learned works:

  • Start with candid talks about goals and risks—clarity early shrinks misunderstandings later.
  • Pick the right tools for the moment, whether it’s an earnout or a tight timeline. Be inventive but grounded; every term should drive the deal forward.
  • Document everything clearly—vague agreements spark disputes that sour deals.
  • Respect the human side. Buyers and sellers aren’t just signing papers—they’re navigating trust, ego, and ambition. Keep them motivated, not defensive.

The best negotiators don’t just close deals—they build partnerships that last beyond the transaction. A well-run process doesn’t leave one side drained. It sets both up to win.

Etienne FOURQUET
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