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Retrading

A buyer renegotiating a term, usually price, after an agreement in principle has already been reached.

What Retrading Is​

Retrading happens after the handshake. The buyer has made an offer, both sides have signed a letter of intent, and then, often deep in due diligence or near closing, the buyer tries to lower the price or harden the terms. Warrillow defines it plainly:

"Re-trading: When one party in a negotiation tries to renegotiate a deal term (often the price) after an agreement in principle has been made."

Warrillow, The Art of Selling Your Business, Appendix B

McDannell describes the same move in her glossary as a buyer "lowering the price or changing terms near closing after agreeing to an LOI." Both authors treat it as one of the defining hazards of the final stretch of a deal.

Legitimate vs. Bad-Faith Retrading​

Warrillow draws the key distinction. A retrade can be legitimate, when the buyer discovers a genuine material change, such as financials that do not reconcile or a problem the seller failed to disclose. It can also be bad-faith, a deliberate bait-and-switch in which the buyer bids high to win exclusivity, then chips away at the price once the seller has no other options. Warrillow's chapter 14 walks through both versions: a legitimate retrade is a renegotiation prompted by something real; a bad-faith retrade is a tactic.

Why Sellers Are Vulnerable​

Retrading works because the seller's leverage collapses the moment the LOI is signed. The no-shop clause takes the business off the market, so the seller can no longer credibly walk to another buyer, and the buyer knows it. As Warrillow argues, signing a no-shop clause swings power to the buyer, who can then drag diligence and re-trade.

Time compounds the problem. McDannell's recurring warning is that delay itself is the enemy:

"Time kills all deals."

McDannell, Get Acquired, ch. 6 / ch. 7

Deal fatigue sets in. After months of diligence, a worn-down seller is far more likely to cave on a late price cut than to blow up the transaction and start over.

How to Prevent It​

The two authors offer complementary defenses. McDannell's approach is to name the rule out loud at the start. She declares at LOI signing that retrading will not be tolerated, and credits this directness, not wishful thinking, for the fact that she has never had a retrade:

"Burnout is a real thing, and you can't put a price on a healthy mental and emotional state."

McDannell, Get Acquired, ch. 1

Warrillow's defenses are a layered set: nail your numbers so nothing surprising surfaces in diligence, be transparent up front, check the buyer's reputation, keep competition alive as long as possible, cap diligence at roughly sixty days, and lock in a face-to-face commitment he calls the no-re-trading handshake:

"I'll agree to this on one condition: no re-trading. Do we have a deal?"

Warrillow, The Art of Selling Your Business, ch. 14

The handshake does double duty: it secures a verbal commitment and it telegraphs that you are a savvy seller who will walk on a bad-faith retrade. Both authors agree on the underlying logic. The seller's best protection is built before the LOI is ever signed, through clean numbers, a vetted buyer, preserved leverage, and an explicit understanding that the agreed price is the price.

Further Reading​

Sources: McDannell, Get Acquired ch.1, ch.6-7; Warrillow, The Art of Selling Your Business ch.14, Appendix B.