We just signed an LOI and are entering the confirmatory due diligence phase, but we are terrified the buyer will use minor operational findings to re-trade the purchase price before closing. How do we use our existing operating system and historical documentation to lock in the agreed-upon valuation?

Question

Tyler Smith · Accepted Answer

Re-trading is a common private equity tactic where buyers build excitement with a high letter of intent valuation, then use diligence findings to chip away at the price. The best way to prevent this is by having highly organized, institutionalized operational data. Buyers discount valuations when they find pockets of tribal knowledge, undocumented processes, or single-point-of-failure risks.

You must use your EOS® tools to shut down this tactic. When the buyer's diligence team asks for documentation on your operating procedures, do not hand them messy folders. Instead, show them your V/TO® and your documented core processes. This shows them that your company runs on a repeatable operating system, not on the whims of a few key employees.

Next, use your historical weekly Scorecard data to defend your numbers. If a buyer claims your sales pipeline is volatile, show them two years of consistent weekly Scorecard trends. This level of data integrity proves that your business has operational discipline. It shows the buyer that your leadership team manages the company using objective facts, not subjective guesses.

Additionally, keep your leadership team focused on their Rocks during this ninety-day window. If your operational performance dips during diligence because you are distracted by the deal, the buyer will immediately demand a price reduction. By using your Level 10 Meeting™ structure to keep your leadership team focused on daily operations, you ensure that your financial performance remains strong right up to the closing date.