The buyer's letter arrived two days before the money was due

The situation

The letter came from the buyer's counsel two days before the closing wire was scheduled to go out, addressed to Camille's counsel with a copy to Tom, the buyer who had spent four months in diligence on Camille's second company, an e-commerce operation based in St. Thomas that sold home goods online. The letter stated, in careful but unmistakable terms, that the buyer's finance team had identified a recurring pattern of customer chargebacks over the prior two years that had not been disclosed anywhere in the data room, and that this pattern represented an off-balance-sheet liability the purchase price had not accounted for. It asked for a price reduction in the high six figures and a short delay to closing while the issue was reviewed.

Camille had built and sold one company before this one, an HVAC-adjacent parts business, and had gone through a clean, uneventful closing that time. She had expected this deal, structured similarly and represented by the same buyer's firm on the other side, to run the same way. Sarah, her operations lead who had joined partway through the company's growth after years working as an IT support lead for a larger retailer, managed most of the customer service and fulfillment relationships and was the one who had actually been closest to the chargeback pattern the letter referenced, though nobody on Camille's side had thought to frame it as a disclosure issue during diligence. Tom, before he moved into acquisitions for the buyer's group, had spent years working as an HVAC technician, and he brought the same methodical, checklist instinct to the diligence process that had made him good at diagnosing mechanical faults, which was part of why the chargeback pattern had caught his attention in the first place.

The chargebacks in question stemmed from a stretch, roughly eighteen months earlier, when a shipping partner had repeatedly delayed deliveries during a peak season, leading to a wave of customers disputing charges with their card issuers before goods arrived. The company had refunded some, fought others, and eventually resolved the shipping problem, after which chargeback rates returned to normal. Camille had not thought of this as a hidden liability because, from her perspective, it was a resolved operational hiccup from over a year earlier, not an ongoing financial obligation.

The urgency was immediate and specific: the wire was scheduled, staff had been told the sale would close that week, and Camille had already begun winding down her involvement in daily operations in anticipation of handover. A delay risked unsettling the staff and signalling instability to the company's remaining customers and suppliers at exactly the moment the buyer needed continuity to protect the value it was paying for.

What made this urgent

Two pressures converged at once, and each made the other worse. The first was the calendar: the purchase agreement's outside closing date, the deadline by which the deal had to close, was less than three weeks out. If the chargeback dispute could not be resolved before then, either side would gain the right to terminate once that date passed, a right that would not be available to whichever side's own failure to perform had caused the delay. Practically, that meant the deal risked falling apart entirely, not because either side wanted that outcome, but because financing commitments and other conditions tied to the original date would start to unwind on their own schedule regardless of what the parties preferred.

The second pressure was the state of the underlying records. When we asked Sarah to pull the full transaction history behind the disputed chargebacks, it became clear that the company's records from that period were incomplete. The company had switched payment processors about a year after the chargeback spike, and a meaningful portion of the historical transaction detail, including documentation of which chargebacks the company had successfully fought and recovered, had not been fully migrated to the new system. What remained was a partial picture: enough to show the pattern existed and had a clear operational cause, not enough to show precisely how much of it had already been resolved in the company's favour before the switch.

This mattered enormously for the negotiation, because the buyer's demand assumed the full chargeback total represented a live, unresolved liability, when in reality a meaningful portion of it had almost certainly already been recovered or written off in the ordinary course of business well before the sale was ever discussed. Without complete records, Camille could not simply produce a number and disprove the buyer's framing outright; she could only reconstruct as much of the picture as the remaining data allowed and argue the rest from what was reasonably inferable.

Underneath the specific dispute sat a broader question about what the representations in the purchase agreement actually required. Camille had represented, as sellers routinely do, that the company had no undisclosed material liabilities outside the ordinary course of business, a clause meant to catch the kind of obligation that would not show up on a balance sheet but would still cost the buyer money after closing: pending litigation, warranty exposure, or a pattern like this one. Whether a resolved, historical customer service issue from eighteen months earlier counted as a liability at all, let alone a material undisclosed one, was genuinely arguable, and that argument needed real evidence behind it to hold up against a buyer's counsel who had already committed to a position in writing.

What we did

1. Requested an immediate short extension to the outside closing date, framed as protecting both sides' interests in getting the underlying facts right rather than as a delay tactic, since rushing a response before the records could be properly reviewed risked conceding a position that a few more weeks of work might have avoided. The buyer's counsel agreed to a two-week extension.
2. Directed Sarah to reconstruct the transaction history from whatever sources remained: the old payment processor's partial exports, shipping records from the delayed-delivery period, and internal customer service logs that had survived the systems migration even where the processor's own records had not. This rebuilt a workable, if incomplete, picture of how much of the chargeback pattern had already been resolved.
3. Obtained a letter from the old payment processor confirming its standard records retention practices and explaining, in its own words, the scope of what had and had not transferred during the migration to the new system, which gave the gaps in the record a credible, independent, third-party explanation rather than leaving them looking like something the company had simply failed to keep track of on its own.
4. Built a reconstructed accounting of the chargeback pattern showing the total disputes, the shipping-related root cause, and the portion that could be documented as resolved, clearly separating what was proven from what was reasonably inferred from surrounding evidence, so the buyer's team could see exactly where the record was solid and where it was not. Presenting the two categories separately, rather than blending them into a single confident number, made the analysis more persuasive precisely because it did not overstate what the surviving records could actually support.
5. Challenged the buyer's characterization of the issue as an undisclosed liability, arguing that a resolved, historical operational issue tied to a shipping partner the company no longer used did not meet the standard for a material undisclosed liability under the representations Camille had given, while acknowledging that the incomplete records made a full rebuttal impossible. This kept the negotiation anchored to what the representation actually required, rather than letting the buyer's opening letter set the frame for the entire discussion by default.
6. Negotiated a reduced adjustment tied to the unresolved portion only, proposing that any price reduction should reflect the genuinely undocumented gap in the reconstructed records rather than the buyer's original full estimate, which had assumed, without support, that none of the underlying chargeback pattern had ever been resolved in the company's favour before the sale. Anchoring the ask to the documented gap, rather than the buyer's opening number, gave Camille a defensible floor to negotiate from instead of simply splitting the difference.
7. Added a narrow post-closing cooperation clause requiring Camille to assist with any further chargeback-related inquiries for a limited period after closing, which gave the buyer some ongoing comfort against the residual uncertainty in the record, in exchange for accepting a smaller, defined price adjustment than originally demanded in the letter. The clause was deliberately bounded in time and scope so it functioned as a concession the buyer could accept, not an open-ended obligation Camille would still be answering years later.
8. Kept the staff and remaining supplier relationships out of the dispute entirely, ensuring internal communications about the delay stayed limited to a small group on each side, since the underlying negotiation had nothing to do with company operations and unnecessary disclosure of a late-stage price fight risked unsettling the very continuity the buyer needed the deal to preserve through the handover period.

The outcome

The deal closed roughly five weeks after the buyer's initial letter, with a price reduction that was real but well below the buyer's opening demand, landing closer to the documented gap in the reconstructed records than to the full chargeback total the buyer had first cited. Camille accepted the adjustment rather than pushing for a full rebuttal, on the basis that the incomplete records genuinely could not support a claim that none of the disputed liability existed, only that most of it had likely already been resolved.

The concession Camille made was real, not cosmetic: she gave up a meaningful amount from the price she had expected to receive, and the post-closing cooperation obligation meant her involvement with the company did not end cleanly at the wire transfer the way it had on her first sale. This was not the clean close she had experienced before, and she has said as much since, describing the process as harder and slower than she expected going in.

What the negotiation did avoid was the deal collapsing altogether, or Camille accepting the buyer's full original demand simply to make the problem go away before the extended deadline. The reconstructed records, imperfect as they were, gave her side enough credible ground to argue the actual number down substantially, even without complete documentation. Sarah's work pulling together whatever evidence survived the systems migration turned what could have been an unanswerable claim into a negotiated compromise both sides ultimately accepted.

Camille has said she now treats every material past operational issue, resolved or not, as something to flag proactively in future diligence, rather than waiting to see whether a buyer notices it first. Tom, for his part, closed the deal satisfied that the reduced price reflected a genuine gap rather than a bluff, which mattered to him given that he would be the one explaining the final number to his own investment committee. The compromise held because both sides could point to something concrete behind it, even if neither got the number they had originally wanted.

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