What to Do If the Buyer Wants to Renegotiate the Price After Due Diligence

It's one of the most common — and most uncomfortable — turning points in a business sale: the buyer has completed due diligence and comes back with a lower offer than you originally agreed in the letter of intent. Is it justified, or is it a negotiation tactic?

Short answer: Always ask for a specific justification for each point the buyer raises. Distinguish between real, documented findings (e.g. an overlooked liability or a declining key customer relationship) and general "cold feet" negotiating. If the findings are real, it's often better to negotiate a fair adjustment than to let the deal collapse. If they're not, you need to be able to hold your ground — with an advisor or mediator to support you if the negotiation stalls.

Why does this happen so often?

Due diligence almost always uncovers something — no business is 100% flawless in its accounts, contracts or processes. Some buyers deliberately use minor findings as leverage to push the price down, regardless of how material the findings actually are. Others have a legitimate concern, because something central to their original assumptions has turned out not to hold up.

How to tell a real finding from a tactic

• Is the finding documented concretely? — Is the buyer asking for a reduction "in general", or are they pointing to a specific, quantifiable issue?
• Could it not have been discovered earlier? — Was the information available before due diligence, or has it only surfaced now?
• Is the reduction proportionate to the finding? — A claim of DKK 500,000 for a DKK 50,000 liability is rarely proportionate.

How to handle the negotiation

Never react in the heat of the moment. Ask for time to review the claim with your advisor or accountant, and come back with a factual, not emotional, counter-argument. Consider whether a partial solution makes sense: an indemnity for the specific issue (rather than a general price reduction), an escrow arrangement, or an earn-out where part of the payment depends on whether the concern turns out to be real. Also see our business transfer agreement template, which has a built-in provision for indemnification of specific, known risks.

When should you consider mediation?

If the negotiation stalls, and both parties are genuinely interested in completing the deal, a mediator can often move things forward faster than a deadlocked direct negotiation. A neutral third party can separate the factual issues from the emotional pressure that naturally arises when a deal is suddenly at risk.