We're about 2 weeks from closing on the sale of my 12-person landscaping company. Buyer's attorney just sent over a request for a $15k price reduction, citing 'increased corporate compliance fees' that they claim weren't factored into the original offer. This feels like a last-minute shakedown. Has anyone dealt with this? Do I tell them to pound sand or is this just how it goes?
Negotiation
What to do when a buyer demands a discount because corporate fees went up
Classic 11th hour move. They know you've got legal fees sunk into this and are testing to see if you'll blink. How bad do you need this specific deal to close?
Tell them you'll meet them halfway on the fees if they sign a personal guarantee on the AR. Watch how fast that demand disaappears.
What does your purchase agreement say about adjustments? If there's a defined mechanism for closing costs, point to that. If not, this is just a negotiation.
This is standard buyer behavior. They always try to claw back a few points right before closing. Counter at $5k off and a 30-day transition period, then hold firm.
Are the fees actually going up? Because if they are, the buyer has a point. Due diligence is supposed to uncover that stuff
coffee_queen, I think the point is that this is a tiny landscaping outfit, not a conglomerate. Corporate fees on a 12-person shop can't be $15k unless there's something else going on.
I had a buyer try this with me on an HVAC business. I told them the price was the price, and if they wanted to renegotiate, I'd relist. They signed the next day. But I also had another deal where the buyer walked because I wouldn't budge. It's a gamble.
This is why you never celebrate before the wire hits. Buyers get weird at closing.
spatula_city, that's a good data point. But the HVAC guy had leverage. Landscaping might be more replaceable. Rusty, do you have backup buyers?
Also, check the purchase agreement for a 'no shop' clause. If you signed one, you might not have the option to walk and relist without a penalty or a waiting period. That changes the calculus completely.
No backup buyers. We signed an exclusivity clause, so relisting means sitting on the market for another 60 days minimum and eating the carrying costs. The fees are real, but they're maybe $4k annually, not $15k. Feels like they're using it as a hook to get a bigger discount. I'm leaning toward countering with a $5k reduction and a demand that they drop the inspection contingency.
Sounds like you've already made up your mind. Good luck.