Selling a business is supposed to be the final act—the culmination of years of long days, hard decisions, and relentless work. It’s the moment when risk and sacrifice finally convert into reward. After months of diligence, you’ve answered every question, reviewed every clause, and begun to imagine life after the sale. Then, just as closing nears, the buyer calls. They’ve “discovered” something new. They want to “adjust the valuation.” The number on the table suddenly drops.
That moment has a name: the re-trade.
A re-trade occurs when a buyer revises their offer after exclusivity has begun, typically during diligence or immediately before closing. The stated reason is usually a new discovery, but often the motive runs deeper. By the time a re-trade surfaces, the seller has already invested significant time, emotion, and capital in the transaction. The business owner has paused operations to respond to endless information requests, told their key people that a sale is coming, and spent heavily on legal and accounting fees. The buyer understands this dynamic. That leverage—created by fatigue and commitment—is what makes re-trades so effective.
Re-trades are common in lower middle-market M&A. Some are justified; many are tactical. The first kind arises when real facts change: perhaps revenues slipped, a key customer left, or an undisclosed liability appeared during diligence. In these situations, a buyer has reason to revisit valuation, and most sellers would do the same in reverse. The second kind is more insidious. It occurs when a buyer bids high to win exclusivity, then uses diligence as an opportunity to chip away at price. Sometimes they blame their financing partners or “market conditions.” Sometimes they simply sense the seller is too far in to walk away.
The language of a re-trade is rarely confrontational. It sounds reasonable, even professional. The buyer expresses concern about “working capital fluctuations” or “customer concentration risk.” They reference their lender’s “revised underwriting criteria.” These statements are framed as objective facts, but they often rely on selective interpretation. Beneath the surface, they are attempts to renegotiate through psychology rather than data.
There are usually warning signs. A buyer who submits an unusually fast letter of intent with minimal diligence upfront is one to watch. If they can’t clearly explain how they arrived at their valuation, it likely means they want flexibility later. Buyers who rely heavily on bank financing are also prone to re-trades; if their lender tightens terms, the easiest fix is to squeeze the seller. Even shifts in tone during diligence—an abrupt change from collaboration to intense scrutiny—can indicate preparation for a price adjustment.
The most reliable protection against re-trades is preparation. Sellers who invest time in pre-sale diligence dramatically reduce the risk. Clean financial statements, updated contracts, and a well-organized data room leave buyers with little to “discover.” Surprises are the oxygen that fuels re-trades; eliminate them, and you suffocate the tactic.
Another safeguard lies in resisting the urge to rush into exclusivity. Sellers often grant exclusivity too soon, eager to secure a deal or build trust. But exclusivity transfers leverage. Once the buyer knows they are the only party at the table, the seller’s negotiating power diminishes. Keeping multiple discussions alive—even informally—maintains competitive tension and keeps buyers honest.
The Letter of Intent (LOI) is also a critical defense. Many LOIs are intentionally vague, leaving ample room for reinterpretation later. A strong LOI defines key metrics like working capital targets, sets clear criteria for what constitutes a “material adverse change,” and limits the duration of exclusivity. It may also require written justification for any price adjustment. The more specific the document, the harder it is for a buyer to justify a re-trade without evidence.
Disclosure sequencing is another subtle but important tool. Rather than releasing all information at once, thoughtful sellers and their advisors structure disclosure in phases. Sensitive or potentially concerning data should be shared after a buyer has demonstrated seriousness and understanding of the business context. Too much information too early can invite misinterpretation or create opportunities for selective pressure later.
While these preventive steps can reduce risk, re-trades sometimes happen despite best efforts. When they do, the key is to manage rather than react. The first step is to separate substance from emotion. Determine whether the buyer’s claim is factually valid and financially material. If the issue truly affects valuation, address it through structure—perhaps by adjusting an earnout or escrow—rather than conceding price outright. If the justification is weak or strategic, test the buyer’s conviction by reopening discussions with other interested parties. Many re-trades collapse the moment a seller signals they are willing to walk away.
The cost of a re-trade extends beyond price. It consumes time, drains morale, and erodes trust between parties. It can poison post-closing relationships, especially in transactions where the seller stays involved under an earnout or rollover equity. In private equity deals, a re-trade is often an early indicator of the buyer’s future behavior: a tendency toward control, pressure, and revision.
Ultimately, re-trades exploit vulnerability—emotional, informational, or procedural. The defense lies in preparation and process discipline. A buyer who values the business for the right reasons will honor agreed terms. One who doesn’t is revealing something essential about their character before the ink is dry.
Selling a company is a negotiation of both numbers and integrity. The seller’s job is to ensure that when the deal closes, it reflects the true value of the enterprise, not the fatigue of the person who built it.