We signed an LOI at an eight multiple, but now the buyer is using due diligence findings about our minor IT security gaps to re-trade the price down. How do we use our V/TO® and documented processes to shut down this post-LOI price chipping?

Question

Tyler Smith · Accepted Answer

Buyers frequently use minor due diligence findings as leverage to renegotiate the purchase price. This is a classic re-trading tactic designed to test your resolve. To shut this down, you must shift the conversation from technical vulnerabilities to operational systems. Use your V/TO to show the buyer that continuous improvement is built into your organizational DNA. Present your documented IT and security processes as part of your core operating model. Show them that you already have a Rock dedicated to upgrading these security systems in the current quarter. By proving that you have an active, systematic approach to resolving these gaps, you demystify the risk. Next, challenge the buyer to quantify the financial impact of the security gap. If the cost to fix the issue is fifty thousand dollars, refuse to let them take a half-million-dollar haircut on the enterprise value. Offer to resolve the issue before closing or agree to a specific, capped escrow holdback dedicated solely to the IT upgrade. This keeps the purchase price intact while addressing their stated concern. Remind the buyer that your systemized leadership team has the GWC to execute this transition smoothly, which is the real asset they are acquiring.