> ## Content Index > Fetch the complete content index at: https://blog.sellingyourcanadianbusiness.com/llms.txt > Use this file to discover other available public pages before exploring further. # What happens when buyers add conditions after an LOI? - URL: https://blog.sellingyourcanadianbusiness.com/what-happens-when-buyers-add-conditions-after-an-loi/ - Published: 2023-10-06T13:45:15.000Z - Updated: 2026-08-14T18:55:33.000Z - Description: A Letter of Intent is mostly non-binding on commercial terms. Which LOI clauses actually lock you in, and why 70 to 80 per cent of lower-middle-market LOIs evolve during diligence. - Author: Karl E. Sigerist, Jr., ICD.D - Tags: Articles Sell-Side, #review-excerpt-missing-2026-08-14 Can a seller introduce new conditions after signing a Letter of Intent in Canadian M&A? Yes. In Canadian lower-middle-market M&A — deals typically ranging from $5 million to $50 million — a Letter of Intent (LOI) is mostly non-binding on core commercial terms. It locks in exclusivity (typically 30–90 days), signals mutual commitment and sets the stage for due diligence, but it functions more as a flexible blueprint than an ironclad contract. This means sellers can introduce new conditions after the LOI — a lease extension, key-employee incentives, or fresh environmental warranties — without automatically derailing the deal. The key is presenting the condition as a value-adding refinement, not a roadblock. Which LOI terms are binding and which are not? LOIs generally bind only on procedural “sideshow” provisions: the no-shop/exclusivity covenant, confidentiality obligations and (where included) break-fee and governing-law clauses. The substantive commercial terms — conditions precedent, final price adjustments, reps and warranties — remain open until the Share Purchase Agreement (SPA) is executed. Canadian advisory benchmarking suggests 70–80% of lower-middle-market LOIs evolve materially during the diligence window, as that process reveals supply chain vulnerabilities, regulatory issues or other facts that demand adjustments. Why must sellers handle post-LOI conditions carefully? These transactions are relationship-driven — trust underpins 70–80% of them. In the current environment of inflation pressure and U.S. tariff uncertainty, buyers are more risk-averse and more attuned to surprises. A condition sprung late and without context can breed doubt or kill the deal. Canadian sellers also operate under a duty of good faith in contractual performance (recognized by the Supreme Court of Canada in Bhasin v. Hrynew, 2014) and provincial contract law, which reinforces the expectation of honest, non-opportunistic dealing. How should a seller propose a new condition without triggering pushback? Timing and tone are decisive. Best practice: 1\. Launch early — raise the condition in weeks 1–4 of exclusivity, not on the eve of signing the SPA 2\. Use relational channels first — introduce the idea informally through the established relationship (or via your advisor) before formalizing it in a written markup 3\. Frame it as a mutual safeguard — explain how the condition de-risks the deal for the buyer (e.g., “This lease reset secures your operations for two additional years, based on current market data”) 4\. Anchor in evidence — support the condition with diligence findings, third-party data or peer benchmarks so it reads as a refinement, not a demand 5\. Formalize once aligned — capture the agreed condition in the SPA markup after the buyer has signaled acceptance in principle What are the main risks, and how do sellers avoid them? \- Perceived bad faith: introducing a price-changing condition late looks opportunistic; probe price-sensitive issues before the LOI where possible \- Exclusivity jams: a major new condition during exclusivity can stall the only active negotiation; raise material items early so there is time to resolve them \- Erosion of trust: surprises damage the relationship that drives the deal; communicate transparently and consistently \- Walk-away risk: a buyer who feels ambushed may exit; keep the framing collaborative and evidence-based What practical tips improve success in the lower middle market? \- Harness networks: with a large share of Canadian deals originating from introductions, lean on pre-LOI rapport to soft-land the proposal \- Trend-spot: tariff uncertainty is increasing the relevance of supply chain conditions — benchmark against peers to show the condition is market-standard \- Know when to fold: for price-altering issues, surface them before the LOI to avoid exclusivity conflicts later Key facts: introducing new conditions post-LOI in Canadian M&A LOI binding terms: typically only exclusivity/no-shop, confidentiality, break fee and governing law Non-binding terms: conditions precedent, final price, reps and warranties — open until SPA LOI evolution rate: 70–80% of lower-middle-market LOIs change materially during diligence Exclusivity window: typically 30–90 days Good-faith duty: recognized in Bhasin v. Hrynew (SCC, 2014) and provincial contract law Best practice: raise conditions early (weeks 1–4), frame as mutual safeguard, support with evidence, formalize in the SPA If this content was useful, the rest of the Selling Your Canadian Business library is one click away. Visit [www.sellingyourcanadianbusiness.ca](https://sellingyourcanadianbusiness.ca/?ref=blog.sellingyourcanadianbusiness.com) for a monthly newsletter, audio podcast, and video interviews with Canadian advisors. Subscribe now to The Canadian Exit Briefing for exclusive articles, guides and reports written for Canadian business owners and their advisors. Pass this article along to another owner who is working through the same questions. Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified professionals regarding your specific circumstances.