Price renegotiations after soft financials

For most sellers, the deal economics in the LOI are what they expect to walk away with. The headline purchase price gets mentally locked in, and any subsequent changes can feel like a bait-and-switch. But for buyers, diligence is when the real underwriting begins, and if QoE findings come in softer than expected, the valuation has to be reassessed.

That misalignment of expectations can cause deals to unravel quickly. Sellers may feel insulted or suspicious when buyers come back with a lower price or revised structure, even if the change is justified by the data.

When Michael’s family was under contract to sell their business, the buyer renegotiated the deal structure substantially. The buyer, a private equity–backed generator company, had agreed from the outset to acquire both the commercial and residential sides of his family’s business. This was a non-negotiable for his father, who was ready to retire and didn’t want to sell only part of the company. But partway through diligence, the buyer abruptly announced that they only wanted the commercial segment.

“My initial gut reaction was kind of like, ‘What the heck?’ Something pretty drastic is changing mid-process. My first inclination was to feel a little bit of a jab by it,” Michael said.

What buyers can do: Set the tone early. Make it clear that the LOI is non-binding and contingent on diligence, specifically that major price or structure changes will only occur in the case of material new findings. Where possible, document the rationale behind the purchase price in the LOI, so future adjustments feel grounded rather than opportunistic. And if changes must be made post-LOI, communicate them with the seller respectfully and transparently. It is more likely that the deal falls apart if you attempt to retrade the structure meaningfully, so try to align on big-picture terms up front with the seller, and don’t try to secretly bait and switch at the eleventh hour.

Diligence feels overwhelming or invasive

The diligence phase is where most deals either build momentum or fall apart. For sellers, especially first-timers, the experience can feel like an unrelenting audit. They’re asked to produce everything from customer contracts to detailed payroll logs, often while still running the business full-time.

What starts as enthusiasm can quickly turn into emotional fatigue. Sellers get overwhelmed, burned out, and sometimes frustrated enough to walk away. When every request feels like a test — or when documentation is requested without a clear explanation — it can lead to mistrust between you and the seller.

When Michael’s family’s first buyer decided mid-process to only purchase the commercial side of his family’s generator business, a second buyer was brought in for the residential segment. That meant running two separate diligence processes in parallel.

The shift required them to essentially restart diligence for the new buyer while also keeping up with the original buyer’s ongoing requests, adding an additional layer of complexity that wasn’t anticipated up front.

What buyers can do: Be thoughtful about how and when you request information. Start with a diligence checklist that’s tailored to the size and complexity of the business. Explain the why behind your asks, and stagger requests rather than dumping everything at once. When appropriate, accept high-level summaries or work through the seller’s CPA or attorney to reduce the burden on the seller. Just as important: Keep the process moving. Stalled diligence timelines can create deal fatigue and erode trust. Celebrate small milestones (like completing a financial review or successful discussions with a vendor) to reinforce the progress you’re making.

Lack of trust or relationship

Even when the numbers work, deals can die if the seller doesn’t trust the buyer. This is especially true with legacy-minded owners who care deeply about the future of their employees, customers, and brand.

If the buyer is all business — focused solely on spreadsheets, financing, and legal terms — sellers may worry they’re handing the company to someone who won’t respect what they’ve built. Without a human connection, your negotiations will feel more transactional and adversarial.

What buyers can do: Make relationship-building with the seller a priority. Ask the seller about their vision, values, and post-exit goals. Keep regular touchpoints: a weekly check-in call, an in-person dinner, or even a quick text message to update on the process. Demonstrating genuine interest in the seller’s perspective — especially after the LOI is signed — can defuse tension and smooth over hiccups when they arise.

Timeline slips and communication breakdowns

Deals live or die on momentum. Once an LOI is signed, sellers expect a relatively predictable march toward closing. But when buyers miss deadlines, go dark, or seem disorganized, it shakes the seller’s confidence.

From the seller’s perspective, it can signal one of three things: the buyer doesn’t have their financing together, they’re not serious about closing, or they’re stalling for a better negotiating position.

What buyers can do: Create a shared, milestone-based timeline at the outset of diligence — mapping out key phases like financial review, legal drafting, and lender approval. Over-communicate as things progress. If something is delayed (e.g., waiting on a lender's approval), proactively inform the seller and offer a new estimated date. Sellers don’t need perfection. They just want predictability and transparency.

Customer or employee churn

During the LOI-to-close period, sellers are still running the business, but sometimes with one foot out the door. This transitional time can lead to instability. A key employee might leave, or a major customer might churn.

For buyers, these developments can spark concern about business continuity and post-close performance. For sellers, though, they may feel normal, something that happens in the day-to-day of running a business.

What buyers can do: Don’t blow small things out of proportion. Instead, ask the seller to explain the situation and their plan to address it. If a sales rep left, is there someone ready to step up? If a big customer canceled their contract, was it expected? Is there a plan to re-engage them or replace the revenue? Treat it like a joint problem to solve, not a reason to exit. Sellers who feel supported are more likely to collaborate openly and even help you mitigate risks before the deal closes.

Inexperienced attorney involvement

It’s easy to underestimate how much your deal team shapes the outcome of a transaction. When a buyer brings on an inexperienced attorney or one who’s not familiar with SMB deals, they can unknowingly introduce friction, delays, or flag issues that are standard in the industry.

What buyers can do: Invest in an experienced deal team. Hire attorneys and advisors who have closed small business acquisitions and understand how to navigate issues like reps and warranties, indemnification caps, or seller notes. Experienced professionals won’t just protect you — they’ll also keep things moving and avoid unnecessary conflict with the seller.

Seller gets cold feet

Sometimes, everything looks right on paper — until the seller backs out. Maybe they got nostalgic. Maybe they had a great week of sales and decided they’re not ready to walk away. Or maybe the emotional weight of selling finally caught up to them.

Even well-intentioned sellers can get cold feet, especially if the process drags on or if they feel misunderstood by the buyer.

What buyers can do: Use early conversations to understand why the seller is exiting. Are they retiring? Pursuing another opportunity? Burned out? Post-LOI, keep reinforcing the benefits of the transition and express your excitement to carry their legacy forward. Sellers who feel seen, respected, and supported are less likely to pull out at the last minute.

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