The scenario. A bootstrapped SaaS company, $4 million in ARR, receives an unsolicited inbound from a private equity firm. The firm wants to acquire 100% of the stock. The founder has never run a sell-side process before and is trying to figure out what to sign and in what order.
Day 1–3: The NDA
Before the founder shares any non-public financials, customer information, or product roadmap, both sides sign an NDA. The default that the buyer hands across the table is bilateral — protecting buyer information too. The founder should counter with the firm’s unilateral, founder-friendly NDA that protects the seller’s information without giving up rights to develop competing products with the firm’s own information.
Key terms to fight for: a residuals carve-back (the buyer cannot weaponize “residuals” in the recipient’s memory), no-hire protection covering the seller’s key employees, and a tight definition of confidential information.
Day 7–21: Diligence and the data room
The buyer asks for a thirty-item due-diligence list. The founder uploads to a virtual data room. The data room is staged — financials and product first, employee compensation and customer-by-customer revenue only after the LOI is signed. Releasing too much too early gives the buyer free option and weakens the seller’s negotiating position.
Day 21–35: The Letter of Intent
The buyer’s draft LOI lands. It will be mostly non-binding (price, structure, key terms) with surgically binding provisions for exclusivity, expense reimbursement, and confidentiality. The founder counters with the firm’s seller-friendly LOI, which tightens the exclusivity clock, narrows expense reimbursement, and inserts a “definitive-agreement-by” date that the buyer cannot extend unilaterally.
Day 35–42: Exclusivity
If the buyer insists on exclusivity in a standalone document (or if the LOI process is dragging and the buyer wants a lockup before the rest of the LOI is final), the founder uses the stand-alone Exclusivity Agreement. Short fuse (30 days, not 60 or 90). Narrow scope (only stock-purchase transactions for substantially all of the company). Clean walk-away (no penalty if the buyer’s diligence reveals nothing material).
Day 42–60: The Term Sheet
The LOI typically commits to a price band. The term sheet that follows is where the economics are nailed down. The PE term sheet covers purchase price and structure, working capital adjustment mechanics, escrow size and duration, representation and warranty insurance use, indemnification basket and cap, management rollover, post-closing employment terms, and the closing conditions package. This document drives the eventual purchase agreement — every fight you push to the purchase agreement is harder to win than the same fight at the term-sheet stage.
The Founder M&A Forms Library
The four documents above — NDA, LOI, Exclusivity, Term Sheet — live in the Founder M&A Forms Library. Each is paired with a practitioner’s guide explaining the clauses buyers will push back on and the leverage the seller has at each stage. Founders can download the Word versions and adapt them; the guides explain when each clause matters.
Pacing the process
Sixty days from NDA to signed term sheet is normal. Faster than that and either the buyer is doing thin diligence or the seller is leaving value on the table. Slower than that and momentum dies. The four-document sequence above is what the cadence of those sixty days actually looks like.
Talk to a Florida Business Lawyer
If you are navigating a scenario like this one, schedule a consultation with Montague Law at 904-234-5653 or use the contact form. The firm represents founders, investors, and business owners statewide and nationally from offices in Fernandina Beach and Coral Gables (Miami).
Templates and resources referenced
- Confidentiality Agreement (NDA) – M&A Diligence
- Letter of Intent – Stock Acquisition
- Exclusivity Agreement
- PE Term Sheet
- Founder M&A Forms Library
This case study is a composite illustration drawn from common founder scenarios. It does not describe any specific client or matter and is provided for general informational purposes only. It is not legal, tax, or financial advice and does not create an attorney-client relationship. Consult counsel for guidance tailored to your specific facts.
