What is No-Shop Clause?
An exclusivity promise not to solicit or negotiate other offers for a set window after signing a term sheet or LOI.
A no-shop (or exclusivity) clause stops you from shopping the deal once an investor or acquirer has put a term sheet or LOI on the table. For a fixed period - often 30 to 60 days - you agree not to solicit, encourage, or negotiate competing offers while they complete diligence and paper the deal. It's one of the few parts of an otherwise non-binding term sheet that binds immediately. Why it matters to you: the no-shop transfers leverage to the other side the moment you sign, because you can no longer credibly threaten to walk to a competitor. Keep the window as short as you can, make sure diligence is well underway before the clock starts, and avoid signing exclusivity until the headline terms are genuinely agreed.
Example
- A Series A term sheet includes a 45-day no-shop. During that window the founder can't run a competing process, even if another fund comes knocking.