Offers & due diligence
How can I reduce the risk of a buyer retrading the price before closing?
Why buyers retrade after exclusivity, how to remove both their reasons and their leverage, and how to tell a fair adjustment from a tactic.
By Michael D. Rubin, CEO & Founder · September 2026 · 862 words
The best protection against a retrade is to leave the buyer nothing new to find and somewhere else for you to go: verify your own earnings before going to market, disclose known problems before the letter of intent, make the letter specific, keep diligence short, keep the business performing, and keep other buyers interested until closing. A buyer retrades when it believes it has a reason and that you have no alternative.
A retrade is when a buyer, after you have signed a letter of intent and granted exclusivity, tries to lower the price or change the terms, usually pointing to something found in due diligence. Some retrades are fair responses to real problems. Others are tactics that rely on seller fatigue. Your goal is to remove both the reasons and the leverage.
Why retrades happen
Exclusivity changes the balance. Before you sign a letter of intent, several buyers may be competing. Afterward only one is in the room, and you have probably told your family, your attorney and your CPA that a deal is coming. The buyer knows that walking away would cost you months and put the company back on the market with a question mark attached.
If diligence produces a finding, even a small one, it can be used to reopen the price. The later it comes, the harder it is to refuse: by then you may have spent months and legal fees on the deal and mentally moved on to life after the sale. Removing the findings and keeping alternatives alive are the two ways to defend against that.
Remove the reasons
Think of it from the buyer's side. Its team is paid to find reasons to pay less. Every issue you have already explained, documented and priced is one it cannot present as a discovery. Your aim is a diligence period in which the buyer only confirms what it was told.
- Verify your own earnings first. Have adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, with owner and one-time costs added back) and every add-back supported before buyers see it. Larger companies often commission their own outside review of earnings for this purpose.
- Disclose early. Put known issues on the table before the letter of intent, when they can be priced once rather than negotiated twice.
- Keep performance steady. A soft month or quarter during diligence is a classic trigger for a retrade that sticks.
- Fix the working capital method. Agree how the working capital target will be set in the letter of intent; an open definition invites a late adjustment.
- Clear third-party issues. Talk to your landlord and check key contracts for consent requirements before the buyer does.
Remove the leverage
The most powerful of these is the backup buyer. A buyer that knows you have a credible alternative is far less likely to test you with a late price cut, because it risks losing the company altogether. That only works if the other buyers were real to begin with, which is one more reason to run a competitive process rather than negotiate with a single party.
- Keep exclusivity short and tie it to a diligence timeline with milestones.
- Make the letter of intent specific. Price, structure, escrow, earnout terms, working capital method and your post-closing role should all be defined.
- Keep backup buyers warm. Tell the runners-up you are in a process, not that it is over.
- Screen for financing. A buyer that cannot fund the full price has more reason to renegotiate when its lender pushes back.
- Keep diligence moving. An organized data room and quick answers leave less time for second thoughts.
Fair adjustment or tactic?
Ask for the evidence and the calculation behind any request. If the finding is real, a structural answer such as a specific escrow or indemnity can be better for you than a straight price cut. If it is not, being able to walk away, because another buyer is still interested, is the strongest reply you have.
| Situation | More likely a fair adjustment | More likely a tactic |
|---|---|---|
| Earnings revised | A specific add-back could not be supported, and the math is shown | A general claim that the numbers feel light |
| Customer concern | A major customer has actually given notice | Vague worry about a risk you disclosed before the letter |
| Working capital | The agreed method produces a lower figure | A new definition introduced late in the deal |
| Timing | Raised promptly when found | Raised just before closing, when you are most committed |
How we run it at MDR & Associates
Every company we represent goes to market with a financial recast, and every buyer completes a financial profile before seeing details. Through our sell-side service we negotiate multiple letters of intent at the same time, which makes a backup buyer realistic when a first choice tries to reopen the price. A principal of the firm is in every negotiation, including the late ones, and we present every revised offer to you in person so you decide. The long read on what causes a sale to fall apart in due diligence and our ten-step process show where these risks sit. To talk about protecting a deal you are planning, contact us.
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