We're about 6 weeks into due diligence with a buyer for my commercial landscaping company. Original offer was 2.1M. They've now come back wanting to knock off 250k, citing "deferred equipment maintenance" and a couple of customer contracts that are month-to-month. I kind of saw something coming but not that big. How do you handle this conversation directly with the buyer without it turning into a slow bleed where they keep chipping away? Do I hold firm, or does that just blow up the deal at this stage? Anybody been through this and can tell me what actually worked vs what made it worse?
Negotiation
How to handle price drops directly with the buyer
The month-to-month contracts thing is real and buyers will always lean on it. But 250k on a 2.1M deal is a 12% haircut which feels like an opening move, not a final number.
Deferred maintenance is one of those things that's either a legit 20k fix or a convenient excuse to grab six figures. Have you actually pric ed out what they're claiming? Ask for the itemized list. Nothing kills a vague price drop faster than making them put numbers on paper.
been on the buying side for a bit. When we ask for a reduction it's usually because we need it for the bank or we're testing if there's room. Sometimes both. Holding firm works if you're genuinely willing to walk. If the buyer senses you won't, they'll keep pushing.
I'd counter once, cleanly, and make it clear it's your last number. Something like "we'll meet you at X for the equipment items but the contract risk is already priced in." Vague resistance is what invites the chiping game.
lol at "deferred maintenance." every seller I know has deferred maintenance,it's called owning a business. anyway. did you get an LOI with a no-shop clause? because if they can still walk around and shop you, you have zero leverage and they know it.
Bit of a tangent but "month-to-month" can actually be spun the other way. If those customers have been with you for years and just never signed a term deal, that's not churn risk, that's loyalty. I'd push back hard on that specific point with actual retention numbers.
yeah but Paisley, buyers hear "month-to-month" and just see "can leave whenever." Numbers help but a lot of them won't move off the framing. Still worth putting the history in front of them though.
What did your broker/advisor say? If you're going direct with no rep this is exactly where deals die. Also curious if the 250k is really 250k or if they want it structured as a holdback/earnout, cuz those are two very different things and buyers love to blur them.
Good point above. A price cut and an earnout feel identical to the buyer's spreadsheet and completely different to your bank account. Nail down which one they're actually proposing before you respond at all.