We are concerned that a buyer will use the exclusive due diligence period to retrade our valuation based on minor market fluctuations. How do we protect our agreed-upon purchase price during this high-stress window?

Question

Tyler Smith · Accepted Answer

Retrading is a common tactic where a buyer agrees to a high valuation in the Letter of Intent to secure exclusivity, only to chip away at the price once you are locked in. To defend against this, you must maintain operational momentum and leverage during the entire due diligence process.

First, never stop running your business. The biggest mistake owners make is taking their eye off daily operations to focus on the transaction, causing revenue to dip during due diligence. If your numbers soften while the buyer is reviewing your books, you hand them the perfect excuse to demand a price reduction. Keep your leadership team laser-focused on their quarterly Rocks and Level 10 Meeting™ discipline.

Second, establish a highly organized, comprehensive virtual data room before you sign the Letter of Intent. When a buyer asks for a document, deliver it within twenty-four hours. This level of speed and organization signals that your business is tightly run and leaves no room for the buyer to claim they found unexpected risks.

Finally, maintain a credible backup plan. Let the buyer know through your advisor that you are fully prepared to walk away from the table if they attempt to modify the agreed-upon terms without a material, unforeseen discovery. Knowing you are willing to walk is your ultimate leverage.