Can My Buyer Reprice My Deal After We Already Signed the Agreement?
When “Signed” Doesn’t Mean Closed
I signed the acquisition agreement. The team celebrated. My investors are already modeling the payout.
Then the buyer’s lawyer calls with “concerns” about last quarter’s numbers. No one says the word “terminate.” They just want to talk about the price again.
Most founders don’t see this coming. Signing and closing are two different events, and the gap between them is exactly where a buyer finds leverage to cut what they agreed to pay me.
Plain-English Breakdown
A Material Adverse Change clause (also called Material Adverse Effect, or MAC/MAE) is a closing condition. It gives the buyer a way out, or a way to renegotiate, if something bad enough happens to my business between signing and closing.
What the Clause Actually Lets the Buyer Do
- Refuse to close if my business takes a defined, serious hit before the closing date
- Use the threat of walking away as leverage to demand a lower price instead of formally invoking the clause
- Point to a bad quarter, a lost customer, or a missed projection as the trigger, even when my deal was never contingent on hitting a number
Most buyers never litigate a MAC claim. They don’t need to. The threat alone is often enough to force a price cut.
Why “Retrade” Is the Real Risk, Not Litigation
Deal professionals call a last-minute price cut a “retrade.” Recent M&A data shows retrade attempts are a common, recurring cause of failed and renegotiated closings. Delaware courts set a genuinely high bar for a buyer to prove an actual MAC. A buyer will use the clause as a bargaining chip regardless. Consider a seller who signed at a $40 million valuation, only to have the buyer’s counsel call three weeks before closing to flag one soft month as a material adverse change. The business hadn’t actually deteriorated, but fighting that claim in court would have taken longer than closing, so the founders agreed to an eight percent price cut just to get the deal done.
The Carve-Outs Are Where the Real Negotiation Happens
Push to exclude these from counting against me:
- General economic or industry-wide downturns
- Changes in law or regulation affecting the whole sector
- Anything the buyer asked me to do or not do during the gap period
- Missing my own internal projections, as opposed to an actual operational decline
The Gap Period Is Not a Finish Line
Between signing and closing, I am still running the business under interim covenants. A slip there, unrelated to the MAC definition itself, can hand the buyer a separate reason to reopen price talks.
Common Founder Mistakes
- Treating Signing as the End of the Deal. Founders relax after signing. Champagne gets poured, the team hears the news, and operational discipline slips. That’s the window a buyer is watching.
- Accepting a Vague, Buyer-Drafted Definition. The first draft always favors the buyer: broad language with few or no carve-outs, no materiality threshold tied to actual financial impact, and no cap on how long the buyer can drag out “concerns” before closing.
- Not Preparing Investors for a Possible Retrade. Founders tell investors the deal is done the day it’s signed. When a repricing conversation shows up weeks later, the surprise damages trust, and founders negotiate from a weaker, more emotional position.
10-Minute Self-Check
Before I sign an acquisition agreement, I work through this:
- Does my MAC definition include carve-outs for general economic and industry-wide conditions?
- Is there a specific materiality threshold, not just vague “adverse” language?
- Have I confirmed how long the gap period between signing and closing will run?
- Do I know exactly which interim covenants I have to follow before closing?
- Have I told my board and investors this window carries real repricing risk?
- Do I have counsel ready to respond fast if the buyer raises “concerns” instead of formally invoking the clause?
If I cannot answer yes to all of these, I am not protected against a retrade before I close this deal.
Bottom Line: Where the Real Protection Comes From
A signed acquisition agreement locks in a process, not a price. The MAC clause sets the real boundaries on that gap: how much room a buyer has to walk away or push for less. Negotiate those boundaries before I sign. Once signatures are on the page, I’m negotiating from a promise, not from leverage.
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