The Retrade: Coaching a Founder Through a Price Cut Days Before Close
A founder called me at nine at night, nine days before his close, and the first thing he said was that he was going to walk. The buyer had come back that afternoon and lowered the price by six percent, citing something their accountants had found in the customer contracts. He had been in a process for five months. He had told his wife the number. He had already, in his head, paid off the building and set aside the money for his kids. And now a stranger with a spreadsheet wanted to take a piece of it back, and he wanted to tell them exactly where to go. I let him finish, and then I asked him one question. If the price cut had come on day one, in the first letter, would he have signed. He went quiet, and then he said, probably. That pause was the whole coaching engagement in a single second.
This is the retrade, and it is one of the most emotionally violent moments in the entire arc of selling a company. A retrade is when a buyer, after the letter of intent is signed and usually deep into diligence, comes back and asks to lower the price or worsen the terms. It is common. Roughly one in three lower middle market deals gets retraded at least once between signing and close, and the founder is almost never warned that it might happen to them. So when it does, it does not land as a negotiating move. It lands as a betrayal. And a founder who responds to it as a betrayal, rather than as the negotiation it actually is, tends to make the single most expensive decision of the entire sale.
My job in that moment is not to tell the founder whether the number is fair. The bankers and the deal counsel handle the number. My job is to keep the founder from letting the feeling make the decision. Because the retrade is engineered, whether the buyer means it to be or not, to hit a founder at the exact point of maximum exhaustion and maximum sunk cost. Five months in, legal bills mounting, the team half sensing something, the founder emotionally spent and already living in the future the sale was going to buy. A buyer who lowers the price in month one is negotiating. A buyer who lowers it in month five is also negotiating, but they are doing it against a person who no longer has the energy to fight and who feels they have already spent the money. The timing is the leverage.
The first thing I do is slow the clock down. The founder feels the retrade as an emergency that demands an immediate, righteous response, usually some version of no and never. It is not an emergency. A retrade delivered on a Tuesday does not have to be answered on Tuesday. I tell founders to acknowledge receipt, say they will review it with their advisors, and get off the phone without giving a reaction. The instinct to defend the price in the moment, with heat, is the instinct to protect. But heat is information the other side reads, and a founder who explodes has just told the buyer how badly they need to close. Silence for twenty four hours costs nothing and buys the founder back their judgment.
The second thing I do is separate the two questions the founder has fused into one. There is the money question, which is whether the reduced price is still a good outcome. And there is the fairness question, which is whether the founder has been wronged. These feel like the same question and they are completely different. A deal can be unfair in how it was conducted and still be, at the lower number, the best available future for the founder and their family. The retrade offends the fairness question so loudly that founders stop hearing the money question at all. They will walk away from a genuinely good outcome to avoid feeling like they got played. My work is to make sure the money question gets answered on its own terms, cold, before the fairness feeling casts the vote.
To do that I ask a version of the question I asked that founder at nine at night. Forget the original number. It is gone, and it was never real, it was an offer, not a possession. Look at the number in front of you today, as if it arrived fresh this morning with no history. Is that number, at that price, with those terms, a life you want. If the answer is yes, then the only thing standing between the founder and a good outcome is their attachment to a figure that existed on paper for a few months and was always contingent. If the answer is no, then the retrade did the founder a favor by revealing the real floor, and walking is rational rather than reactive. Either way the decision gets made on the future, not on the wound.
Then we get honest about whether the retrade has a real basis, because not all retrades are the same and the founder needs to tell them apart. Some retrades are opportunistic, a buyer testing whether a tired seller will give up a few points near the finish line for no reason other than that they can. Others are substantive, the diligence genuinely surfaced something, a customer concentration heavier than the founder represented, add-backs the quality of earnings team would not credit, a working capital picture worse than the pitch. A substantive retrade is partly the founder's own house not having been in order, and I have written before about how much of that outcome is set by the identity and preparation work a founder does long before a buyer ever appears, in the identity work a founder does before a sale shows up in the price. Knowing which kind of retrade you are facing changes whether you push back hard or accept that the number was always soft.
I also make the founder look squarely at their alternative, because a retrade is only as strong as the seller's willingness to walk, and most founders have not honestly priced their walk. Going back to market after a busted deal is not free and it is not neutral. There is the lost time, another six to nine months. There is the question every next buyer asks about why the last deal died, and the founder has to have a clean answer. There is the risk that the business drifts while the founder is distracted, and a softer next year is a weaker next pitch. None of that means a founder should never walk. Sometimes walking is exactly right, and a buyer who retrades once will often do it again, so a founder who caves teaches them to keep coming. But the decision to walk has to be made with the real cost of walking on the table, not as a proud reflex.
The part founders find hardest to hear is that the retrade is often partly about leverage they gave away earlier, at signing, without knowing it. The moment a founder grants a buyer exclusivity in the letter of intent, the competitive tension that held the price honest disappears, and the buyer knows there is no other bidder in the room. That is precisely the structural setup that makes a late retrade tempting, and my colleagues have written about it in detail from the deal-mechanics side in the no-shop clause and why your leverage peaks the day you sign the LOI. I raise this not to make an anxious founder feel they blundered, but because understanding that the retrade is a predictable consequence of the deal's structure takes some of the personal sting out of it. It is not that this buyer is uniquely dishonest. It is that the geometry of exclusivity invites this move, and a founder who sees the geometry stops taking it as a character attack.
Underneath all of the tactics, the retrade is a test of a founder's identity at the worst possible moment, which is why it belongs in coaching and not only in the data room. A founder's sense of what the company is worth has by this point become tangled up with their sense of what they are worth, and a price cut reads to the nervous system as a verdict on the person. I spend real time separating those two things out loud, because a founder who can hold the line that this is a negotiation about an asset, and not a referendum on their life's work, negotiates from steadiness instead of from ego. The founders who lose the most in a retrade are almost never the ones who accepted a lower number. They are the ones who let a six percent cut become a story about disrespect and torched a good outcome to protect a feeling.
That founder who called me at nine at night did not walk. He slept on it, we ran the money question cold the next morning, and the reduced number was still comfortably the best future on the table. His advisors clawed back part of the cut by pushing on the weakness of the buyer's stated basis, and he closed about two weeks later a little lighter than he had dreamed and a great deal heavier than he had any other realistic path to. A year on he does not think about the six percent. He thinks about the building he paid off and the fund he set up for his kids. The stretch that comes after the close, when a founder who just handed over control has to metabolize what they actually did, is its own distinct piece of work, and I wrote about that in the week after the wire clears. But it only gets to happen if the founder survives the retrade with their judgment intact.
If you are staring at a retrade right now, the anger is real and it may even be deserved, but it is a terrible advisor. The number in front of you is the only number that exists. The one you lost was never yours to keep. Getting a founder through that moment with a clear head, so the decision is made on the future they actually want and not on the affront they feel, is a core part of what we do at Cordis Group, because the human capacity to stay steady under pressure is not separate from the price, it is part of what protects it.