How can you avoid a retrade when selling your business?
Selling a business is a major milestone, but one common pitfall is the retrade — when a buyer tries to renegotiate the agreed purchase price after the deal is struck, often during due diligence when new information surfaces. A retrade can lower the final price and even derail the transaction. With careful planning, Canadian owners can reduce the risk. Nine steps help protect the deal.
1. Engage M&A advisors — owners usually sell once while buyers acquire often; advisors close that gap, market to multiple buyers and negotiate the best price and terms, reducing retrade risk
2. Be transparent — disclose both strengths and weaknesses upfront; addressing red flags early lets you control the narrative and removes surprises a buyer could use as leverage
3. Know your buyer — research the buyer's track record for renegotiating after signing and understand what drives them, so you can structure the deal accordingly
4. Under-promise and over-deliver — provide realistic, accurate projections; over-inflated forecasts invite a retrade if results fall short
5. Prepare thorough financials — ensure statements are accurate, current and complete; consider an accountant's review and clearly explain any non-recurring events
6. Engage a sell-side Quality of Earnings (QoE) report — an independent analysis that surfaces financial issues before the buyer does and builds buyer confidence
7. Understand the valuation basis — ask how the buyer arrived at the price and have a third party (M&A advisor, CPA or Chartered Business Valuator) validate it
8. Negotiate while you have leverage — don't rush into an exclusive Letter of Intent; use multiple offers to improve price and terms before going exclusive
9. Use specialized M&A legal counsel — a strong Letter of Intent and sale agreement with protective or no-retrade clauses limits the buyer's ability to renegotiate later
Key facts: avoiding a retrade
Retrade: a buyer renegotiates the agreed price after signing, usually during due diligence
Common triggers: financial discrepancies, undisclosed liabilities, missed projections, unclear valuation
Prevention: M&A advisors, upfront transparency, realistic projections, clean financials, sell-side QoE report
Protection: independently validated valuation, negotiating leverage, M&A counsel with no-retrade clauses
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified advisors regarding your specific circumstances.
