We just signed an LOI with a forty-five-day exclusivity period, and the buyer is already using minor findings in tech due diligence to retrade our agreed valuation multiple. How do we manage this LOI-to-close phase to prevent erosion of our deal structure without blowing up the deal?

Question

Tyler Smith · Accepted Answer

The period between signing the letter of intent and closing the transaction is the most vulnerable time for a seller. Buyers use exclusivity to lock you up, stop you from talking to other parties, and then systematically chip away at your valuation during diligence. If they try to use minor tech or operational findings to retrade your multiple, you must have a clear playbook. First, do not let your operations slip. A drop in performance during exclusivity gives the buyer legitimate leverage. Keep running your Level 10 Meeting™ schedule and hitting your quarterly Rocks to show the business is highly stable. When the buyer raises a diligence issue, do not get defensive. Require them to quantify the exact financial impact of their finding. If they claim a technology gap exists, demand to see how that gap directly reduces your future EBITDA. If the issue is minor, offer a highly targeted indemnity or a specific transition services agreement rather than allowing a permanent reduction in your purchase price multiple. Let them know you are willing to walk away if they breach the spirit of the signed agreement. Having a strong sell-side team and a clear internal operating system proves to the buyer that you are disciplined, organized, and not desperate to close at any cost. This posture alone is often enough to stop a retrade in its tracks.