How to stop diligence from becoming a re-trade
The negotiated price survives when the evidence is ready and consistent.
Winning a strong letter of intent is only the midpoint. The buyer still has to confirm the facts that support the price.
Price reductions during diligence usually begin with one of four problems: earnings do not reconcile, working capital is different from expectations, a material risk was disclosed late, or the forecast loses credibility. Buyers may also use ordinary findings to reopen economics when the seller no longer has alternatives.
Preparation limits that opportunity. The normalized earnings analysis should be supported by source documents. Working capital methodology should be modeled before the LOI. Customer and employee data should reconcile across systems. Contracts, leases, permits, and ownership records should be organized. Management should understand the forecast and use the same definitions.
Process discipline matters as much as the data. Track requests, answer completely, and correct errors quickly. Escalate changes in the buyer's position. Preserve the ability to enforce milestones or terminate exclusivity if diligence becomes open-ended.
No seller can prevent a legitimate adjustment when the facts differ from the agreed assumptions. The objective is to distinguish a real issue from a negotiating tactic and to address both with evidence.
The price in the LOI is a proposition. The diligence record is what allows that price to become cash at closing.