Yes, a buyer may seek to reduce their offer after due diligence if new information affects the business's value or risk profile. Common reasons include lower-than-expected profits, undisclosed liabilities or operational concerns. However, the seller does not automatically have to accept a revised offer, and both parties' legal positions depend on the agreements already in place.
Three important considerations include:
- Reasons for the reduction: Buyers may request a lower price if due diligence reveals financial discrepancies, outstanding debts, customer concentration or unexpected investment requirements.
- Supporting evidence: Ask the buyer to explain the proposed adjustment and provide evidence of the issues identified. Consider whether the findings genuinely affect the business's valuation.
- Alternative negotiations: Rather than accepting a lower price, you may be able to negotiate deferred payments, an earn-out or contractual protections that address the buyer's concerns.
For example, if a buyer initially offers £600,000 but discovers significant liabilities during due diligence, they may propose reducing the purchase price to reflect those risks.
Review any proposed changes with your solicitor and financial advisor before agreeing to revised terms. If an agreement cannot be reached, the transaction may not proceed.
Read more: What Happens During Due Diligence When You Sell a Business?
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