Post LOI Purchase Price Negotiations

by a searcher from Tulane University - A. B. Freeman School of Business

2 years ago

During due diligence my partner and I have noticed several variances with some of the figures provided to us Pre-LOI, A $1MM in ARR was presented to us but it is actually closer to $850k and some customer concentration concerns with one client making up a very large percentage of revenue that was not previously noted.  

We were curious as to how standard it is to renegotiate the purchase price prior to the Asset Purchase Agreement and if anyone had experience and best practices with dealing with similar type issues.

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4 comments

professional from University of Wisconsin - La Crosse

I agree with all three above. It is very common to renegotiate during the due diligence process by informing the seller of your findings and how this would impact the purchase price.

6 days ago | like reply | 0 likes

intermediary from Harvard University - Harvard Business School

It's certainly reasonable to renegotiate, as mentioned above. I'd suggest keeping an eye on key metrics, like ARR, throughout the diligence process. It's not uncommon for things to change throughout, depending on how long that process takes, and can make the deal less attractive, or more.

2 years ago | like reply | 2 likes

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