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What happens to the agree upon price between LOI and purchase agreement?

I have been working on business deal since about the beginning of the yr. It has taken this long to get everything worked out. The winter snows kept the first two and a half months of the yr. for making a profit. It is not normal to have this severe of a winter and it has never happened before to have back to back record snow storms. Since the agree upon price occured before the finanicals were assembled for 2010 and we now have the YTD docs. available, should I be able to go back to the owner and renegotiate a lower sale price?

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We are financial consultants to a group of investors whom we have their consent to manage their funds which is in our custody for cooperation in joint venture business investments.

Our areas of interest include Property Development and real estate, Health Care, Education and training, Mining and exploration, Energy, oil and gas,Technology, Software development, Agriculture, Manufacturing, Finance Services and Leisure.However, all viable proposals within reason will be considered.

Funds shall be made available to you as a direct investment loan at 3% interest rate per annual for a period of 2 or 30 years depending on what you prefer. You may contact us if you have interesting investment proposal for possible business collaboration for our study.

We look forward to your reply to enable us provide you with details or you may visit our website.

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Jesse Peterson
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Jun 6, 2017
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Short answer- it depends, but you probably can from a legal perspective. Whether you should or not depends on the deal dynamics.

Long answer - There are a lot of factors at play, both related to legalities and the deal dynamics. First is the LOI (and any other legal documents you may have signed). Most LOI's are non-binding, meaning you can legally your mind about buying the business during the due diligence period. You would have to read the document to determine if this is the case, and you may need some advise about how to get out of the LOI if it is not obvious.

Probably the tougher question to ask is if you should try to re-negotiate. There are a lot of questions you should ask yourself. Were you already getting a great price, or was the pricing on the high side? How big of a price change are we talking about? Did the poor performance change the fundamentals of the business, or do you think it is a one-time event? How important is it for the owner to help you with training and transition? How will the owner react if you propose a change in price? Are there any other items you have uncovered during due diligence that would suggest a change in price? Do you still want to buy this business?

Not knowing any of the dynamics of the deal, it's hard to make much of a recommendation beyond giving you these types of thoughts on what to consider. If you still feel stuck, you may wish to consult an advisor for help, especially if the amounts we are talking about are large.

May 4, 2010

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