Happy Friday! Hope the week’s treating you well.
We often tell practice owners: the Purchase Agreement may be 50+ pages of legal language—but due diligence is where the economics get rewritten.
Because here’s the part most sellers don’t expect:
The “Retrade” (what it is)
A retrade is when a buyer lowers the purchase price (or changes the terms) late in the process—usually after diligence—by pointing to “new findings” that justify a discount.
It typically shows up as one (or more) of these:
Lower price
More money pushed into earnout
Bigger escrow/holdback
Tighter reps & warranties / broader indemnity
“Take it or leave it” pressure because you’re deep in the process
Why retrades happen
Sometimes it’s legitimate (diligence surfaced something real). Often it’s avoidable (the seller wasn’t diligence-ready). And sometimes it’s a tactic (the buyer tries to chip away once you’re emotionally committed).
Either way: if you’re not prepared, your leverage drops fast.
The #1 diligence weapon: the QofE surprise
Most buyers (especially PE-backed platforms) will run a Quality of Earnings (QofE) review to validate EBITDA and normalize cash flow.
Common QofE “adjustments” that lead to retrades:
Add-backs that aren’t documented (personal expenses, one-time items, normalization assumptions)
Revenue timing issues (collections vs. production, refunds, chargebacks)
Provider comp not market-aligned (or not clearly separated from distributions)
Working capital / A/R issues that change what “cash at close” really means
If the story in your LOI is “$X EBITDA,” but the QofE says “actually it’s $X minus…,” the buyer will renegotiate.
The silent killer: staff/provider flight risk
During diligence, people get nervous—especially associates, key injectors, office managers, and billers.
Buyers will retrade (or pause) if they believe:
Production will drop post-close because a key provider might leave
Collections will soften because patient relationships are tied to one person
The operational engine is “tribal knowledge,” not documented systems
How to stop a retrade (the practical playbook)
You can’t control every diligence finding—but you can remove excuses.
1) Get ahead of the QofE
Reconcile financials cleanly (P&L ↔ bank statements ↔ tax returns where possible)
Build a simple add-back schedule with receipts/notes for each item
Separate owner comp, benefits, and discretionary items clearly
2) Build a “buyer-ready” data room (before the buyer asks)
If it’s not organized, it doesn’t exist.
Minimum must-haves:
Financials: last 3 years P&L, trailing 12 months, balance sheet, A/R aging, production/collection reports
Operations: locations, hours, provider schedules, procedure mix, pricing, capacity constraints
HR: org chart, comp structures, contractor vs. employee list, key employment/associate agreements
Compliance/risk: licenses, permits, payer/compliance documentation (as applicable), any known issues with a clear remediation plan
Contracts: lease(s), equipment leases, vendor agreements, marketing contracts, referral arrangements (if relevant)
3) Control the narrative
When sellers lose money in diligence, it’s rarely because the practice is “bad.”
It’s usually because the buyer’s team found something first—and framed it as risk.
The fix: provide a short “practice overview memo” that answers:
What drives growth (and what’s sustainable)
What changed year-over-year (and why)
What’s owner-driven vs. system-driven
What risks exist (and how they’re mitigated)
4) Have a retention plan ready
Even a simple plan reduces buyer anxiety:
Who are the 3–5 “key people”?
What keeps them here (comp, schedule, culture, growth path)?
How do you communicate the transition without spooking the team?
Quick checklist: “Retrade triggers” to eliminate
Before you sign exclusivity, ask yourself:
Could a buyer challenge our EBITDA math?
Could a buyer say revenue is too concentrated (one provider / one location / one referral source)?
Could a buyer claim operations aren’t documented?
Could a buyer worry key people will leave?
Could a buyer reframe working capital/A/R to reduce cash at close?
If any answer is “maybe,” that’s exactly where diligence gets weaponized.
The fix (how we help)
At Viper Partners, we focus on getting your data room and diligence story tight before buyers start digging—so there’s nothing to “discover” at the eleventh hour, and fewer reasons for a price cut.
If you want, we’ll do a quick diligence-readiness review and tell you where a buyer is most likely to retrade—and how to close those gaps.
Questions? Schedule a confidential call below.
Keep winning,
Viper Partners
Seller-Exclusive Healthcare M&A
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Consult your legal and tax advisors regarding your specific situation.