We are in the ninety-day window between signing the LOI and closing, and our revenue is tracking slightly below our quarterly forecast. How do we communicate this deviation to the buyer without triggering a re-trade on the enterprise value?

Question

Tyler Smith · Accepted Answer

Discovering that your revenue is tracking below your quarterly forecast during the ninety-day due diligence window is a critical moment. If you try to hide the dip, the buyer will find it during their daily updates and use it to re-trade the multiple or walk away. Instead, you must run toward the issue and address it proactively in your next meeting. Use the IDS process from your Level 10 Meeting to isolate the root cause. Prepare a clear, data-driven explanation of whether this is a temporary timing issue, such as a delayed contract signature, or a structural change in customer demand. If it is a timing issue, show the pipeline and the exact dates when that revenue will land on the books. If it is structural, present your operational plan to correct it, utilizing your V/TO to prove your long-term goals remain intact. Buyers expect volatility; what they fear is an owner who does not know why the volatility is happening. Showing that you have identified, discussed, and solved the issue operationalizes your capability and builds trust. You should also emphasize that your valuation is based on historical cash flows and long-term earnings stability, not a single ninety-day snapshot. If the buyer pushes for a price reduction, offer to structure a small, performance-based earnout to cover the gap, proving your confidence in the business's recovery.