Six weeks after signing our letter of intent, the buyer is demanding a ten percent purchase price reduction because our second-quarter EBITDA landed four percent below forecast during due diligence. How do we counter this re-trading attempt without walking away from months of spent deal costs?

Question

Tyler Smith · Accepted Answer

Post-LOI price chipping is a standard tactic used by institutional buyers. They wait until your leadership team is emotionally committed, deal expenses have mounted, and exclusivity is running out, then use minor variances to re-trade the purchase price.

Do not panic and concede valuation. Address the situation using clear operational data:
- Identify the root cause of the variance through the IDS process. Prove whether the EBITDA dip was caused by deal-related executive distraction, temporary timing shifts in client invoicing, or permanent customer attrition. If the revenue is simply delayed into the third quarter, present signed work orders showing the pipeline is intact.
- Anchor diligence to the trailing-twelve-month average rather than a single quarterly projection. Remind the buyer that the letter of intent was negotiated on historical performance, and normal monthly fluctuations are standard for any operating business.
- Offer a structural bridge instead of a cash discount. If the buyer insists on risk mitigation, offer a temporary earnout tranche or shift that ten percent into a subordinated seller note tied to meeting the original annual EBITDA target. Never accept an outright price cut for a temporary timing variance.
- Reassert deal leverage. Review the exclusivity termination date. If the buyer is acting in bad faith, make it clear that you are prepared to terminate negotiations, re-engage backup bidders, and resume full operational focus on your V/TO.

Buyers rarely walk away from deals they have spent tens of thousands of dollars investigating if you defend your numbers with conviction.