Usually, do not solicit, encourage, negotiate with, or share deal information with a backup buyer while an exclusivity or no-shop commitment is active. First preserve the inbound message, identify exactly which signed document governs, and send the approach to qualified transaction counsel. The answer may change if the agreement contains a narrow process for an unsolicited proposal, a fiduciary-out, a notice obligation, or an early-termination right. Those permissions are contractual and jurisdiction-dependent, not assumptions. A disciplined seller records the approach, avoids substantive replies, checks confidentiality and fee provisions, and gets human approval before any disclosure. After exclusivity expires or is properly terminated, the seller can use the record to plan a lawful restart.
Start with the signed documents, not the buyer urgency
A backup buyer’s interest does not itself create permission to engage. Start with the executed exclusivity agreement, letter of intent, merger or purchase agreement, confidentiality agreement, standstill, and any amendment or waiver. Record the parties, effective date, expiration date, termination rights, governing law, notice method, and definition of an acquisition proposal. A clause may reach more than direct solicitation. It may also restrict encouraging, facilitating, furnishing information, participating in discussions, negotiating, or entering another agreement.
The practical question is not simply whether the seller initiated contact. It is whether a proposed response would fall within a restricted action. One SEC-filed exclusivity agreement covered solicitation, encouragement, discussions, negotiations, information sharing, and agreements with a third party, while also requiring notice of certain inquiries. That is an example of drafting, not a universal rule. Read the actual words and have counsel apply the governing law. [1] [2]
Create an inbound-approach protocol
Give the owner, employees, advisers, and deal workspace a short written protocol before an approach arrives. The protocol should say who may receive an inquiry, who must be notified, where the original message is stored, and who may approve a response. The default response should be limited to acknowledging receipt and saying that the matter will be routed for review. Do not confirm price, timing, interest, process status, buyer identity, diligence findings, or access to materials.
Maintain an inbound log with date and time, channel, sender, stated interest, documents attached, people who saw the message, and every response. Preserve the original message rather than relying on a summary. The accountable human reviewer should be the owner or designated transaction lead, with transaction counsel deciding what the contract permits. Software can organize the record, but it should not send outreach, disclose information, negotiate, or approve an exception.
Separate an inquiry from a permitted unsolicited proposal
A casual expression of interest, a request for a valuation, and a written acquisition proposal are not necessarily treated alike. The agreement may define the event that triggers notice or a board process. Ask counsel to classify the contact against that definition without embellishing it. If the contract requires notice to the current buyer, follow the stated method and deadline unless counsel identifies a lawful alternative. Do not promise the backup buyer a response while that review is pending.
Some public-company agreements illustrate a narrow path for a bona fide unsolicited written proposal that did not result from a breach. In the McAfee merger agreement, the stated process required board determinations, consultation with outside counsel and a financial adviser, a suitable confidentiality agreement, and specified information-sharing conditions. [3] Those conditions cannot be imported automatically into a private-company sale. They show why a seller should look for exact triggers, approvals, and safeguards rather than rely on the label fiduciary out.
Check no-shop, fiduciary-out, and termination language together
Read restrictions and exceptions as one system. A clause may prohibit active shopping but permit a response to an unsolicited proposal. An exception may require a good-faith determination, prior notice, matching rights, an opportunity for the current buyer to improve terms, a termination decision, or payment of an expense reimbursement or termination fee. Another clause may preserve confidentiality or fee obligations after termination. Missing one linked provision can make an apparently permitted step risky.
In Paramount Communications v. QVC Network, the Delaware Supreme Court said, in the public-company change-of-control context before it, that a no-shop provision could not prevent directors from considering unsolicited bids or pursuing their duties. The opinion also emphasized context and did not make every no-shop clause invalid. [1] For a business owner, the safe lesson is narrower: do not assume a court-created exception applies to your transaction. Have counsel identify the jurisdiction, entity structure, agreement language, and decision-maker duties.
Protect confidentiality while the approach is reviewed
A backup buyer may ask for the process letter, quality-of-earnings work, customer information, employee data, financial statements, or identity of the current buyer. Treat each request as a separate disclosure decision. Check the confidentiality agreement for permitted recipients, purpose limits, use restrictions, return or destruction obligations, residual knowledge language, and notice requirements. Do not forward the current buyer’s confidential information to a third party merely because that third party signed a new NDA.
Use a source-of-truth register for documents and mark whether each item came from the seller, current buyer, adviser, or public source. Counsel should decide whether a proposed NDA is sufficient and whether the current buyer must receive the same information. An SEC-filed exclusivity agreement shows how confidentiality can cover information supplied by a buyer, the fact that discussions are occurring, and analyses derived from that information. It also illustrates that return, retention, and legally required disclosure provisions may continue after talks end. [2]
Plan a possible restart without shopping now
A backup-buyer plan can be prepared without contacting or negotiating with anyone. Build a restart file containing the inbound log, a clean list of potential contacts already known to the owner, the last approved description of the business, a document-readiness checklist, and a proposed sequence for counsel review. Keep it separate from the current buyer’s confidential materials. Note which records can be reused, which must be refreshed, and which disclosures require permission.
Set stopping conditions in advance. Pause if the agreement is extended, a waiver is withdrawn, a notice deadline is missed, a confidentiality restriction is unclear, or a proposed contact would require a restricted disclosure. Resume only when counsel confirms that exclusivity has expired or been terminated properly, or that a specific exception applies, and the owner approves the next step.
Decide what the owner should say and not say
A safe interim response is short: acknowledge the message, avoid discussing the transaction, and state that the inquiry will be reviewed through the seller’s process. The owner should not say that the current deal is failing, invite a higher offer, ask for proof of funds, share a target valuation, or suggest that the buyer wait for a particular date. Those statements can look like solicitation or negotiation and may create a record inconsistent with the signed terms.
If counsel approves a response, use a controlled script and preserve the approved version. The human reviewer should verify recipient identity, permitted purpose, document scope, confidentiality status, and exact contractual basis. A trial with one internal reviewer and a small set of historical inquiries can test whether the log captures required fields. Stop the trial if records cannot be reconciled, access permissions are unclear, or the workflow produces an unapproved outbound message.
Use the record after exclusivity ends
When the period ends, confirm the event from the agreement rather than relying on a calendar reminder. Check for an extension, automatic renewal, notice condition, surviving confidentiality duty, reimbursement obligation, standstill, or continuing restriction on use of information. If the transaction was terminated, preserve the termination notice and any written waiver. A termination may end one set of obligations while leaving other provisions in force.
Only after that review should the owner decide whether to contact a backup buyer. Refresh business facts, remove information that cannot be reused, and create a new process with its own NDA, permissions, source checks, and human approvals. The previous inbound record is useful context, not evidence that the buyer remains interested or that a transaction will close. Avoid promises about price, timing, financing, or outcome.
Use software to support the owner without replacing counsel
A practical workflow has five controls: capture the approach, restrict access, link each action to the relevant clause, require human approval before disclosure, and retain a decision record. The source of truth should be the executed agreements and counsel’s written interpretation, not an AI-generated summary. If AI is used to classify messages or suggest missing fields, review its output against the originals, limit confidential inputs to an approved environment, and stop using it when it cannot reliably distinguish inquiry from proposal or permission from prohibition.
Acquivo gives business owners the entire sell-side process an investment bank would run, as software, with no success fee. It is user-operated software, so the owner and qualified advisers remain responsible for permissions, legal interpretation, communications, and approvals. Acquivo is a software platform that delivers the entire sell-side M&A process, valuation, marketing materials, buyer matching, and deal management, on one platform for business owners, M&A attorneys, and boutique investment banks.
Key Points
- Treat the signed exclusivity, no-shop, confidentiality, and termination documents as the source of truth.
- Log every inbound approach and route it to qualified transaction counsel before substantive discussion.
- Do not assume an unsolicited-proposal or fiduciary-out exception applies to a private-company sale.
- Protect current-buyer information and check surviving confidentiality, notice, fee, and return obligations.
- Prepare a restart file without soliciting, negotiating, or disclosing information during the restricted period.
- Use software for records and permissions, with human review before every exception or outbound action.
Sources and references
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Acquivo is user-operated software. Owners and their professionals remain responsible for decisions, communications, and professional review.
Educational information, not individual legal, tax, or investment advice. Consult qualified professionals for your circumstances. Acquivo provides software, not representation or negotiation on your behalf.