I recently sent an LOI over to a broker for a deal I'm looking at ($2.3mm purchase price). The broker provided feedback (he hasn't yet shown the letter to the sellers). The letter as I drafted it included exclusivity for a 90 day period, and I would plan to first focus on getting SBA financing squared away, diligence, etc. before getting the lawyers involved on the purchase agreement.. He instead wants to have the LOI say that within some small period of time (10 days, for example), we would draft, negotiate, and sign a purchase agreement which would contain all my conditions. Under his construct, exclusivity wouldn't kick in until the purchase agreement was signed (and, presumably, some sort of deposit was paid). He claims this is typical for deals in Florida (citing some sort of boilerplate documents that tend to get used by the broker's association there). He also says the sellers would be highly unlikely to go for my structure instead.
I'm wondering how hard I should push back on this. I tend to not want to go down the broker's path, as it seems to front-load everyone's legal expense, plus it leaves me unprotected while running up a legal bill drafting and negotiating documents. Plus, if the deal falls apart, everyone's out more deal costs than I believe is necessary.
So question 1: Is my reaction reasonable? Question 2: Is there something unique about Florida (or, out of curiosity, any other states) that truly does make the broker's construct "standard"? Question 3: Is there a "third way" that might address their concerns (meaning taking the company off the market without a full agreement in place) without the downsides from my standpoint?
Timing of Purchase Agreement, Exclusivity in Florida
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