06 Apr The Deal Isn’t Done Until the Money Clears: How Buyers Quietly Renegotiate After You’ve Said Yes

You shook hands. You signed the letter of intent. You told your spouse it was finally happening. After twenty-plus years of building your business, someone put a number on the table that made you exhale for the first time in years.

And then the real negotiation began.

If you’ve never sold a business before (and most owners haven’t) this is the part no one warns you about. The LOI isn’t the finish line. It’s the starting gun for a process where sophisticated buyers will methodically look for reasons to reduce your price, shift risk onto your shoulders, and restructure the deal in their favor.

And they’ll do it with a smile.

The Retrading Playbook

“Retrading” is the industry term for what happens when a buyer agrees to one price . . . and then finds ways to lower it after due diligence begins. It’s not illegal. It’s not even uncommon. It’s standard operating procedure for private equity firms and experienced strategic buyers.

Here’s how it works. The buyer offers $18 million. You sign the LOI. Then, during due diligence, their team “discovers” things. Customer concentration risk. A key employee who hasn’t signed a non-compete. Revenue that’s technically recurring but not under long-term contract. Each of these findings becomes leverage to adjust the deal downward.

By the time the purchase agreement lands on your desk, the $18 million has become $14.5 million, plus an earnout, plus a working capital adjustment, plus an indemnity holdback.

You’re three months in. You’ve told your employees. You’ve told your clients. Walking away feels impossible.

That’s exactly the position the buyer wanted you in.

Working Capital: The Hidden Price Reduction

Most sellers don’t think about working capital until it’s too late. Here’s the short version: when you sell your business, the buyer expects you to leave a certain amount of cash, receivables, and inventory in the company at closing. This is “working capital.”

The problem is how it gets calculated. The buyer’s accountants will define a “target” working capital number, usually pegged to a trailing average. If the actual working capital at closing is below that target, the purchase price gets reduced dollar-for-dollar.

I’ve seen sellers lose $500,000 or more in post-closing working capital adjustments they never saw coming. All because they didn’t understand the mechanism, didn’t negotiate the peg, and didn’t have advisors who flagged it early enough.

Earnouts: The Promise That May Never Pay

An earnout is the buyer’s way of saying, “We’ll pay you more . . . if things go well.” It sounds reasonable. But here’s the reality: once you’ve sold, the buyer controls the business. They control the revenue. They control the expenses. They control the accounting. And they control whether the earnout targets are ever met.

I’ve had clients who were promised $3 million in earnout payments and received zero. How?  The buyer restructured costs, changed reporting methods, or merged operations in ways that made the targets unreachable.

An earnout isn’t a guarantee. It’s a bet.  And the house sets the rules after you’ve placed your chips.

Post-Closing Adjustments and Indemnity Holdbacks

Then there are the clawback mechanisms: indemnity holdbacks and post-closing adjustment provisions that let the buyer come back after closing to claim part of your purchase price.

These aren’t theoretical. A buyer discovers an unresolved tax issue. A customer contract that was represented as “in good standing” gets disputed. A warranty claim surfaces. Each one triggers an indemnity claim.  And the money comes out of the escrow you thought was yours.

Sellers who don’t negotiate caps, baskets, and time limits on these claims are writing the buyer a blank check against their own sale proceeds.

How to Protect Yourself

None of this means you shouldn’t sell. It means you need to go in with your eyes open and your team in place before you sign anything.

Negotiate the LOI carefully. The letter of intent sets the framework for everything that follows. Vague terms in the LOI become weapons in the purchase agreement.

Define working capital early. Agree on the methodology, the peg period, and the dispute resolution process before due diligence begins.

Minimize earnouts. Push for as much guaranteed cash at closing as possible. If an earnout is unavoidable, make the metrics objective, the accounting transparent, and the enforcement mechanisms airtight.

Cap your exposure. Indemnity claims should have dollar caps, time limits, and deductible baskets. You should never have unlimited liability after you’ve sold.

Hire the right attorney. Not your general business lawyer. Not your cousin who does real estate closings. Someone who has sat across the table from private equity buyers and their aggressive lawyers and knows every play in their book.

You built this business over decades. Don’t lose millions of dollars in the last ninety days because you didn’t understand the fine print.

Will The Deal You Sign at LOI Be the Deal You End Up With At Closing?

At Garza Business & Estate Law, we represent a select group of business owners each year through the sale of their most valuable asset: their company. We are deliberately selective because protecting a seller through a complex transaction demands the kind of attention and foresight that isn’t possible when you’re spread across dozens of clients.

If what you’ve read here sounds familiar . . . 

If you’ve felt that creeping unease thinking about a buyer changing terms after you’ve already mentally moved on . . . 

Then you understand why the right legal counsel isn’t a cost. It’s the difference between the deal you negotiated and the deal you end up with.

Apply to work with us here: https://lgarzalaw.com/schedule-online/