The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

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?

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., ""

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (2)
Terri Bollman-Wyzkoski
MainStreet Bank
Sr. Commercial Lender
Fairfax County, VA

M Hackett,

Unless and until you sign a Purchase Agreement, a letter of intent is merely just that. It provides terms and conditions upon which you "may" be willing to contract. When circumstances changes, of course, you are wise to consider how those circumstances impacted the value of the company. Price and other factors in the letter of intent should have been based upon verification and subject to change if circumstances change.

We're a commercial loan broker firm that provides packaging of loans and placing them with the appropriate lenders. But we also provide the necessary coaching/counseling with questions just such as these. We also review our clients' letter of intent to identify anything they may not have considered, especially from the perspective of the lender.

We are staffed with former commercial lenders who know how to structure loan requests and how to negotiate with banks to obtain the most favorable terms and conditions. Our lender network consists of banks and lenders nationwide, including banks that do nothing but SBA loans. Because we know their cultures, their interest (or non-interest) in particular industries, and their specific risk appetite, we can quickly identify the most appropriate lender and obtain the needed loan approval on your behalf.

If you'd like us to review your letter of intent, we'd be happy to do it for you . Check out our website, and give us a call or an email.

Kindest regards,
Terri B. Wyzkoski
Managing Member
Business Lending Solutions LLC
11654 Plaza America Drive #363
Reston, VA 20191
Direct: (703) 655-9939

"Your Financial Solutions Provider"

May 27, 2010
No User Photo

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

Start a Discussion