We have signed an LOI with a financial buyer, but they are requesting a retroactive purchase price adjustment based on a sudden dip in our mid-quarter run-rate numbers caused by a planned operational pause. How do we handle this without terminating the deal?

Question

Tyler Smith · Accepted Answer

A sudden dip in performance during the diligence period is a common trigger for buyers to attempt a late-stage re-trade. If your dip was caused by a planned operational pause, such as a major system migration, factory retooling, or team reorganization, you must prove that this was an investment in capacity rather than a structural decline in demand. First, present your normalized EBITDA calculations by treating the pause as a non-recurring event. Show the historical baseline alongside your current pipeline to demonstrate that customer demand remained constant. Bring out your weekly scorecard data from your leadership team meetings to show that leading indicators, like weekly sales activity and inbound inquiries, remained strong during the pause. This proves the drop was an operational choice, not a market-driven contraction. Second, if the buyer remains nervous, suggest a temporary structure adjustment. Propose a short-term earnout or a structured seller note that bridges the exact dollar amount of their proposed adjustment. This note can mature in six to twelve months, contingent solely on your business returning to its historical run-rate. By taking the risk on your own post-close performance, you preserve your headline multiple and prevent them from permanently discounting your enterprise value based on a temporary operational blip.