20 Oct How to Stop a Buyer From Gutting Your Sale Terms Before Closing

You’re finally ready to sell.

You found a buyer.

The Letter of Intent is signed.

You’ve been working through due diligence.

You’ve told your spouse, your kids, your employees.

You’ve even started dreaming about the next chapter of your life . . . retirement, reinvesting, or maybe just getting your time back.

But just when you think the deal is done . . .  it happens.

With the closing scheduled in two weeks, the buyer’s attorney calls.

He says they “need to adjust the terms.”

The reasoning they give:  They need more protection on the covenants.  The working capital projections are not where they need to be.  Upon further review, the receivables look too shaky.

You’re not buying it.  You feel like they’re taking you for a ride but you feel powerless.  Why are they doing this now?

Because they know they have all the leverage… and they’re betting you won’t walk.

This is what experienced M&A lawyers call “gutting the deal at the goal line.”

And if you’re not ready for it, it can cost you millions.

Why It Happens . . . And Why It Works

Sophisticated buyers (think private equity firms, consolidators, and strategic acquirers) have done this dozens, if not hundreds, of times.

They have a playbook.

And near the top of that playbook? “Retrade at the last minute.”

Why? Because it works.

They know that most sellers:

• Are emotionally exhausted after months of due diligence
• Have told friends, family, and employees the deal is done
• Have mentally moved on from the business
• Don’t want to start the process all over again
• Just want to close and be done

And that’s exactly what the buyer is counting on.

They’re not trying to kill the deal.  They’re trying to tilt it in their favor at the very last moment, when they believe you’ll say “yes” to anything just to get it over with.

The Last-Minute Switch: How They Take What’s Yours

Here’s how it usually plays out:

• They claim there was a “surprise” in the Quality of Earnings report
• They argue working capital isn’t what they expected
• They suggest there’s “additional risk” that needs to be priced in
• They want to increase the indemnity cap, extend the survival period, or add a clawback
• They suddenly propose an earn-out or escrow where none existed before

And they do it when your deal team is on standby, your lawyers are finalizing documents, and you’ve already booked the dinner to celebrate.

You feel sucker-punched.

But you’re so deep into the process, you think, “What choice do I have?”

That’s the trap.

How to Stop a Buyer From Gutting Your Terms Last Minute

This doesn’t have to happen to you. But you must plan for it from the very beginning. Here’s how:

1. Set the Rules in the LOI

Don’t treat the Letter of Intent (LOI) as a handshake. It’s the starting gun for a legally strategic process.

Your LOI should:

• Clearly define the purchase price, structure, and components
• State what issues have been disclosed and won’t be grounds for a renegotiation
• Include a timeline with accountability for both sides
• Set boundaries for how working capital and earn-out terms will be calculated
• Have your lawyer involved because this is where most retrades start

2. Manage the Diligence Process, Don’t Just Survive It

This is where having an investment banker to manage the process can be invaluable.  Buyers use diligence to find leverage . . . or create it. You must:

• Control the flow of information
• Require written diligence requests
• Monitor the tone and trajectory of their findings
• Respond with precision, not defensiveness

And most importantly, don’t leave diligence open-ended. Set a hard stop date. The longer it drags out, the more exposed you become.

3. Keep the Deal Competitive Until the End

The biggest mistake sellers make? Going exclusive too early, or not having any other prospective buyers to fall back on.  This can lead to desperation . . . the feeling this deal must work out.

Keep alternatives in play . . . even if softly.

The moment a buyer thinks they’re your only option, they’ll behave accordingly. When they know you have other options, or could restart the process, they’re less likely to pull a last-minute stunt.

4. Have a Deal “Walk-Away” Line . . . and Mean It

Before you even sign an LOI, decide: What’s my bottom line?
What price? What terms? What timeline?

Because if you haven’t defined that in advance, when pressure mounts, you’ll accept a bad deal out of fear.

Remember: sometimes the best deal is the one you walk away from.

5. Get an M&A Lawyer Who Knows the Game

This isn’t something your local business attorney or general counsel can handle. You need someone who:

• Knows the retrade tactics cold
• Can spot the warning signs early
• Builds deal terms that protect you from surprises
• Has the confidence, and experience, to push back

Because once a buyer senses you’re unprotected or underlawyered, you become a target.

Don’t Let the Deal of Your Life Become the Regret of Your Life

Selling your business isn’t just a financial event.  It’s the defining moment of your career.

And yet, more sellers lose money in the last weeks of the deal than at any other time.

Not because the business wasn’t valuable.

Not because the buyer was malicious.

But because they didn’t know how to defend the deal when it mattered most.

You don’t get a second chance to sell your life’s work.

Make sure the deal you sign… is the one you actually get.

Apply to Work With Us

We work with a select group of business owners each year who are preparing to sell their companies and want to do it right. If you’re serious about protecting your deal, your family, and your legacy, we’re ready to help.

We’re not a volume firm. We work closely and selectively with owners of businesses to build legal frameworks that withstand pressure, block retrades, and maximize outcomes.

Apply here to see if we’re a fit: https://lgarzalaw.com/schedule-online/

The buyer has a team.

You should too.