No-Shop Clause

Also called: Exclusivity clause, No-shop

TL;DR

A binding term sheet provision preventing the company from soliciting or accepting competing offers for a defined window after signing.

A no-shop clause prevents the company from talking to other investors or acquirers for a defined period (usually 30 to 60 days) after signing a term sheet. It gives the lead investor exclusivity to complete diligence and negotiate definitive documents without competitive pressure.

No-shops are one of the few binding parts of a term sheet. Breaking one can result in damages and reputational harm. Founders should negotiate the duration, the carve-outs, and the consequences carefully before signing.

Worked example

A Series B term sheet includes a 45-day no-shop. Within those 45 days, the founder cannot solicit or accept other term sheets, the lead investor uses the time to complete diligence and definitive docs without bidding-war risk.

Common pitfalls

•Signing a no-shop with a duration longer than diligence actually requires.
•Failing to carve out continued discussions with existing investors.
•Underestimating the leverage loss from exclusivity.

When this shows up in a pitch deck

Negotiated alongside the term sheet; not deck content.

See No-Shop Clause in context

No-Shop Clause shows up most often in these scoring rubrics and investor profiles, jump straight to who cares about it and how to pitch them.

For investor types

Strategic Investor

Partnership Capital

Related terms

Term Sheet

A non-binding document outlining the principal terms of a proposed financing, used to align investor and founder before legal documents are drafted.

Letter of Intent

A non-binding document outlining the proposed terms of a customer agreement, partnership, or acquisition before formal contracts are drafted.

Due Diligence

The investigation an investor performs to verify the claims in the pitch and assess all material risks before signing a term sheet or wiring funds.

Lead Investor

The investor who sets the terms of a round, takes the largest check, and typically takes a board seat or significant governance role.

Data Room

A secure shared folder with every document an investor needs for due diligence, financials, contracts, cap table, team info, and customer references.

Use No-Shop Clause in your next pitch deck

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