Glossary
Deal economics
What is exclusivity?
A period when a seller negotiates with one bidder only.
It buys certainty and costs competitive tension. Bidders often use it to re-trade once the others have gone.
A worked example
A buyer offers $600m and asks for six weeks of exclusivity. Once it's granted, the seller can't talk to the $580m bidder, and the $600m can quietly become $560m after diligence turns up some 'findings'.
Where it catches you in the game
- In the bid review room, exclusivity firms up most deals and lets some bidders cut their price.
It comes up most on the investment banking desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what exclusivity does to your returns.