We signed our LOI sixty days ago, but the buyer is now attempting to adjust our purchase price downward because they claim our average customer acquisition cost has increased during the diligence period. How do we use the Trust Equation to address their concern without letting them grind down our valuation?

Question

Tyler Smith · Accepted Answer

This is a classic late-stage diligence play designed to test your resolve. To neutralize this renegotiation attempt without blowing up the deal, you must apply the Trust Equation. The Trust Equation measures trustworthiness through credibility, reliability, intimacy, and self-orientation. In a M&A deal, your biggest risk is high self-orientation, which looks like defensiveness or greed to a buyer.

First, demonstrate high credibility by providing the raw operational data immediately. Do not hide the numbers. If your customer acquisition cost spiked, show exactly why. Use your EOS weekly metrics to prove this was a temporary investment in a new channel rather than a systemic failure.

Second, reduce your self-orientation by shifting the focus to mutual problem-solving. Frame the discussion not as a defense of your purchase price, but as a collaborative analysis of long-term customer lifetime value. Show that while the acquisition cost increased slightly, your customer lifetime value also increased due to our newly implemented automated retention workflows.

Third, leverage reliability by demonstrating that your leadership team continues to run the business with disciplined focus. Keep running your Level 10 Meeting weekly and hitting your quarterly Rocks. When the buyer sees that your leadership team remains completely focused on execution and that your performance is highly predictable, their perceived risk drops. This allows you to stand firm on your original valuation multiple because you have built the intimacy and credibility required to resist their late-stage price grind.