I'm facing a situation where the seller is significantly short on the working capital peg we agreed on in the LOI (>$1M shortfall) and the broker has just told me they intend to try and retrade and avoid any price adjustment. If anyone has faced this situation before and was able to successfully hold the seller to the LOI terms, I'd appreciate any tips. The NWC peg was very clear as a % of LTM sales in the LOI.
Dealing with seller trying to retrade post LOI

by a searcher
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From the Seller's perspective (assuming US tax here, noting you hail from Toronto, Canada), the higher percentage of the purchase price assigned to tangible assets and not Goodwill, the better.
That shared, I highly favor an analysis of the actual NWC trend amounts over 18-, 12-, 9-, 6-, and 3-month periods versus a % of sales. Depending on the nature of the business, stability in accounts receivable, inventory, and accounts payable (and other included miscellaneous accounts) may be elusive. Acknowledging a range, accounting for seasonality and/or management practices, and identifying potential outliers makes the most contentious topic in contract negotiations easier to navigate.
In your situation, I believe that most of the community would agree that the Broker is not taking the correct approach to this issue. I would request a meeting with the Seller with or without the Broker (preferably without, but in accordance to any NDA/CA signed) to review the terms that were agreed to in the LOI. Again, the Broker likely would have held you to account to make up any overage of the amount in the LOI and the Seller would likely not overpay for something previously agreed and put to pen and paper. LOIs, generally and solely dependent on the language, are non-binding.
You may have the upper hand if the Seller is experiencing deal fatigue and you threaten to walk, as suggested by others. That's a risky strategy that may backfire if you are still attracted to the deal even with the NWC change. Every deal has hiccups. Is this hiccup severe enough to turn you away?
Price, Terms, and Timing must align for a transaction to occur. If the Broker wants to anchor Price, the alternate party should be able to anchor one of the other two factors. There's no justification for the Seller to object to an alteration of the Terms and/or Timing since his/her Broker has chosen to alter the Price. Yin and Yang and deal judo contain the principles that come to mind in approaching this deal impasse scenario.