Yes, you may be able to change your offer after due diligence if new information affects the business's value or risk profile. Common reasons include lower-than-expected profitability, undisclosed liabilities or operational concerns. However, the ability to renegotiate or withdraw depends on the terms already agreed and whether any legally binding commitments exist.
There are three main considerations:
- Financial discrepancies: If due diligence reveals that earnings, cash flow or assets differ significantly from the information originally provided, you may have grounds to propose a revised price.
- Identified risks: Legal disputes, outstanding tax liabilities, customer concentration or unexpected investment requirements may affect your willingness to proceed on the original terms.
- Alternative arrangements: Rather than reducing the headline purchase price, you could negotiate deferred consideration, an earn-out or additional contractual protections.
For example, if your original offer was based on annual earnings of £200,000 but due diligence establishes sustainable earnings of £160,000, you may wish to revisit the valuation.
Any proposed changes should be supported by evidence and discussed with the seller and your professional advisors.
Read more: What Happens During Due Diligence When You Sell a Business?
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