Khaled Azar 
You signed the buyer’s offer letter, so the price feels settled. It is not. The offer letter only proposes a price.
SRS Acquiom pays out the money to owners when private companies are sold. In its 2026 study of those sales, more than 8 in 10 prices changed after the sale was done. The contract said the price would move up or down if the company’s final numbers differed from the agreed numbers.
Here is the part nobody explains before you sign. The offer letter usually includes a promise to stop talking to other buyers. That promise is called exclusivity. It removes the one thing that kept the buyer reasonable: the chance you could sell to someone else.
The offer letter has a formal name, the letter of intent, or LOI. The final contract is called the definitive purchase agreement. So the job of the LOI is not to agree the price. It is to leave as few points as possible open for the final contract, because every open point gets settled after you have stopped talking to other buyers.
Why your negotiating position flips the day you sign
Nothing about your company changes. Your alternatives do.
Before exclusivity, a buyer who pushes too hard risks losing you to someone else. That risk is doing a lot of quiet work in your favor, and it’s working even if the other buyer is only a maybe.
After exclusivity, your alternative is to walk away and restart. That’s a real option and you should keep it, but it costs months, it costs money, and the next buyer will ask why the last process ended. Both sides can do that arithmetic, which is why the tone of a negotiation can change within a week of signing without anyone being dishonest about it.
This isn’t buyers behaving badly. It’s the structure doing exactly what it was built to do. Exclusivity exists so a buyer can spend real money on diligence without being outbid halfway through. The cost of that protection is paid by you, in bargaining power.
Any term you leave open at LOI stage, you will negotiate later with materially less power. Treat the LOI as the last conversation where you still hold cards, not the first.
The price you agreed is not the price that gets paid
Most founders track one number through a deal. Buyers track three: the headline price, the adjustments applied to it, and the portion you don’t receive at closing.
The purchase price adjustment is the most common of these and the least discussed. It exists to make sure the business arrives with a normal amount of working capital, so you can’t strip the cash and hand over an empty shell. That’s reasonable. What’s less reasonable is agreeing to one without agreeing how it’s measured.
SRS Acquiom, which administers payments and escrows on private deals rather than advising either side, reports that purchase price adjustments are now present in more than 90% of transactions, up from about 50% a decade ago. Their deal terms research puts the figure at 93% of deals, with an adjustment actually occurring in 89% of those.
An adjustment isn’t a risk that might materialize. It’s what normally happens, and the letter of intent rarely says how it will be calculated.
If your LOI says the deal assumes a “normalized level of working capital” and stops there, you haven’t agreed anything. You’ve agreed to argue about it later, during exclusivity, using the buyer’s accountants. Our guide to how the closing adjustment actually works covers the mechanics in detail.
The six terms that drift
These are the ones that move between LOI and signing. None of them read like price. All of them are.
| Term | What the LOI usually says | What it becomes |
|---|---|---|
| Working capital target | “a normalized level” | A number set from a trailing average the buyer’s accountants choose, often above your actual norm |
| Escrow or holdback | “customary holdback” | A specific percentage, held for a specific period, released on conditions written by the buyer |
| Survival period | Silent | How many months your promises about the business stay enforceable against you |
| Liability cap | Silent | The maximum you can be asked to pay back, which is not always capped at the escrow |
| Indemnity basket | Silent | Whether small claims are absorbed, or whether crossing a threshold lets the buyer claim from the first dollar |
| Earn-out mechanics | “based on performance” | The exact metric, who calculates it, and who controls the business while it’s measured |
Two of those deserve naming because founders consistently underestimate them. The survival period decides how long you stay exposed after the money arrives, and it lives in your representations and warranties. The basket decides whether a threshold protects you or becomes a trigger, and it sits alongside your escrow and indemnification terms.
The schedules that only bite software sellers
Everything above applies to any company. These three are where SaaS deals specifically come apart, and all of them live in schedules that the letter of intent almost never mentions.
Deferred revenue inside the working capital target. If your customers pay annually up front, you’re carrying a large deferred revenue balance, which is a liability. How that balance is treated in the working capital calculation can move the final number by a lot, and the treatment is decided in the definitive agreement rather than the LOI. Two defensible methods can be several hundred thousand dollars apart on the same business. Our piece on how annual prepayments are handled in a SaaS sale walks through why.
IP assignment gaps. Your representations will include a promise that the company owns its code. If a contractor, a founder who left, or an early freelancer never signed an assignment, that promise is not true yet, and the fix is a schedule of exceptions that buyers price. Finding these before diligence does is the difference between a disclosure and a discount. This is what IP assignment cleanup is for.
Privacy and data representations. A SaaS company holds customer data, so it gets asked to represent compliance with privacy law and to confirm no unreported incidents. These reps are frequently uncapped or carved out of the basket entirely, which means they sit outside the liability protections you negotiated for everything else. If you agree a cap in the LOI, say explicitly which reps it covers. Our guide to privacy diligence for SaaS sellers covers what buyers actually test.
The pattern is the same as everything else here. None of these appear in the LOI, all of them appear in the definitive purchase agreement, and each one is negotiated at the point where you’ve already stopped talking to other buyers.
What to lock at LOI, and what you can leave
You can’t pin down everything in a letter of intent, and trying to makes you look difficult before diligence has even started. The test is simple: lock the terms whose worst plausible version you couldn’t live with.
Lock these. The working capital target as a number or an explicit formula, not an adjective, and say how deferred revenue is treated inside it. The liability cap, and which representations it actually covers. The survival period. The escrow amount and its release schedule. If an earn-out exists, the metric it pays on and who calculates it.
You can leave these. The detailed schedules, the disclosure lists, the mechanical definitions that lawyers will draft either way, and the closing logistics. These take time but they rarely move value.
The wording matters more than the list. “Customary” and “normalized” and “to be mutually agreed” are not terms. They’re placeholders that will be filled in by whoever has more bargaining power, which after signing is not you. Replace each one with a number, a formula, or a named method.
This is also the argument for doing the work before you’re in a process at all, which is the same reason negotiating the LOI from the seller’s side is worth real effort at a stage when most founders are just relieved to have an offer.
If a term is already drifting
Say you signed, diligence is running, and terms are moving. You have three moves and none of them is outrage.
The first is to ask what changed. A term that moves because diligence found something real is a different conversation from a term that moves because the buyer’s committee wanted more protection. Ask which one this is and make them answer specifically. Genuine findings come with documents attached.
The second is to trade rather than concede. If they want a longer survival period, ask for a lower cap. If they want a bigger escrow, ask for a shorter release. Terms that move in isolation only ever move one direction.
The third is to be honest with yourself about the walk-away point, and to decide it before you’re tired. Most bad closings happen because someone was too far in to stop. Our piece on what to do when exclusivity gets extended covers the version of this that shows up as a calendar problem rather than a terms problem.
One thing that helps more than any negotiating tactic: know what diligence is going to find before the buyer does. Terms drift hardest when something surfaces that you hadn’t flagged, and the red flags buyers look for are mostly findable in advance.
The letter of intent is the last moment you negotiate with competition behind you. Every placeholder you leave in it becomes a term someone else writes. Turn the adjectives into numbers before you sign exclusivity, because afterwards you’re asking rather than negotiating.
Frequently Asked Questions
What is a definitive purchase agreement?
What changes between the LOI and the definitive agreement?
Does the price usually change after the LOI?
Why do I lose negotiating power after signing the LOI?
What should I insist on putting in the LOI?
Can I renegotiate a term after signing the definitive agreement?
Next Steps
If you’re looking at a letter of intent now, the useful first step isn’t reading the contract again. It’s knowing what the business is actually worth, so you can tell the difference between a term that’s costing you real money and one that just reads badly.
Know your number before you sign exclusivity away.