Exclusivity Period

Sometimes referred to as Lock-out or No Shop period, a period of time requested by a prospective investor in which it can carry out its Due Diligence on a company and negotiate the related investment documents. During the Exclusivity Period, the company and its Founders agree not to approach or negotiate with any other sources of funding. Unlike most elements of a Term Sheet, the part dealing with an Exclusivity Period will usually be expressed to be legally binding. Founders, if they agree to an Exclusivity Period at all, should try to keep it as short as possible.