The sale process
Lowball offers and re-trades: how buyers cut your price, and how to stop it
Short answer. A lowball offer is an opening price set low to test your reaction; a re-trade is a price cut after the letter of intent, usually during due diligence. Both work best when you have no alternative and your numbers have gaps. Competing offers, clean numbers, early disclosure of bad news and a specific letter of intent are what protect the price.
Key takeaways
- The first offer is rarely the best one. Without other offers, you have nothing to compare it to.
- Ask how the buyer built the number before reacting to it.
- Most re-trades start from something found in due diligence. Find it first.
- A store that slips during the sale gives the buyer a reason to renegotiate.
- A specific letter of intent and short exclusivity make re-trades harder.
What is a lowball offer, and why do buyers make them?
A lowball offer is an opening price well below what the business is worth. Buyers make them for a few reasons:
- To test you. If you accept quickly, they've saved money. If you push back, they learn how much room there is.
- To anchor. The first number shapes the negotiation. Starting low pulls the final price down.
- Because they see real risk. Sometimes the low number reflects a genuine concern: a recent spike, one channel, numbers that don't reconcile.
- Because they're not serious. Some buyers send many low offers and wait to see who bites.
Only the third one deserves a detailed answer. The others deserve a calm one.
How should I respond to a low offer?
Don't react in the first hour
A low number can feel insulting after years of work. Answering in that mood helps nobody. Thank them, say you'll review it, and take a day.
Ask how they built it
"Can you walk me through how you got to this number?" A serious buyer will tell you which profit figure they used, which multiple, and what risks they priced in. That tells you whether you're dealing with a concern or a tactic.
Answer concerns with data
If they discounted for a recent spike, show the monthly trend. If they doubted an add-back, send the invoice. If they priced in channel risk, show the share of revenue from returning customers. Every concern you answer with evidence moves the number.
Compare the whole offer, not the headline
How much at signing, how much later, and on what conditions? Is inventory included? What's the transition? A lower headline with more paid at signing can be the better deal.
Have alternatives
This is the real answer to a lowball offer. If you have other qualified buyers interested, a low offer is information. If you don't, it's pressure. Approaching several selected buyers at the same time, rather than one after another, is how sellers keep options open. It's also one of the things founders underestimate when selling on their own.
Comparing two offers (illustrative)
The numbers below are illustrative, to show the method. They're not market data.
| Offer A | Offer B | |
|---|---|---|
| Headline price | €500,000 | €430,000 |
| Paid at closing | €250,000 | €400,000 |
| Paid in 12 months, fixed | none | €30,000 |
| Paid in 24 months, if revenue targets are hit | €250,000 | none |
| Inventory | Included | Paid on top at landed cost |
Offer A looks €70,000 better. But half of it depends on targets measured while the buyer runs the business. Offer B puts €150,000 more in your hands at closing, adds a fixed payment, and pays for your stock separately. Depending on how confident you are in the targets, and in the buyer, B can easily be worth more.
The habit to build: rewrite every offer in the same table before you reply to any of them.
What is a re-trade?
A re-trade happens after you've signed a letter of intent and granted the buyer exclusivity. During due diligence, or right before signing, the buyer comes back with a lower price or worse terms.
The timing is not random. Once you're exclusive, you've stopped talking to other buyers, you've spent weeks on document requests, and you're tired. The buyer knows walking away is expensive for you.
Why do re-trades happen?
Some reasons are legitimate, some are tactical. The common triggers:
- Numbers that don't reconcile. Revenue in the P&L doesn't match payouts, costs paid from personal cards appear, an add-back has no invoice.
- Performance drops during the process. The founder is busy with the sale, the store slips, and the buyer re-prices on the latest months.
- Surprises. A supplier without a contract, an unregistered trademark, a past ad account restriction, a dispute nobody mentioned.
- Changed circumstances on the buyer's side. Financing got more expensive or harder to get.
- Pure tactics. No new facts, just a bet that you won't walk away.
How do I prevent a re-trade?
Do your own due diligence first
Most re-trades start from something the buyer found. Find it first. Rebuild your P&L from the bank, document add-backs, check contracts and account ownership. Our due diligence checklist is a good starting list.
Disclose bad news early
A problem you disclose before the letter of intent is part of the price. The same problem found in week five of due diligence is a reason to re-trade. Put known issues in writing before you sign anything.
Keep the business performing
A store that holds or grows during the sale keeps its price. If running the sale and the store together is too much, get help with one of them.
Make the letter of intent specific
The more precise the price mechanics, the less room for reinterpretation. Spell out what the price includes, how inventory is handled, which profit figure the price is based on, and what happens if numbers move within a set range.
Keep exclusivity short and conditional
Exclusivity is reasonable, but it should be long enough for due diligence and no longer, with a clear end date. Some sellers link extensions to the buyer meeting milestones.
Keep other buyers warm
You can't negotiate with them during exclusivity, but you can end a process politely without burning the relationship. Buyers who know there are others behave differently.
What if a re-trade happens anyway?
- Ask for the evidence. What exactly did they find, and how did it change their valuation?
- Check whether it's real. If it is, a fair adjustment may be reasonable. If it isn't, say so with data.
- Look at structure, not only price. If the disagreement is about the future, part of the price paid later and tied to results can bridge it. We explain the trade-offs in earn-outs.
- Know your walk-away point before the conversation. Going back to market costs time, but a deal that keeps shrinking costs more.
Protect the price from the start
The strongest position in any negotiation is clean numbers, a business that keeps performing, and more than one interested buyer. That's what we build with founders at WiseExit: offers compared side by side, not just on the headline price.
If you want to start from a realistic number, request a free valuation. Answer in 24 hours, zero upfront costs, commission only at closing.
Frequently asked questions
What is a re-trade in M&A?
A re-trade is when a buyer tries to lower the price or change the terms after the letter of intent has been signed, usually during or after due diligence, citing something they found or a change in performance.
Should I reject a lowball offer?
Not immediately. Ask how the buyer built the number. A low offer sometimes reflects a real concern you can answer with data, and sometimes it's just an opening move. Either way, it's only useful if you have other offers to compare it with.
How can I prevent a re-trade?
Make the numbers easy to verify before you sign a letter of intent, disclose known problems early, keep the business performing during due diligence, keep exclusivity short and specific, and stay on good terms with other interested buyers.
Is a re-trade always a bad-faith move?
No. Sometimes due diligence finds a real problem, or performance drops during the process. A reasonable buyer will show evidence. What's worth resisting is a price cut without a clear, verifiable reason.