What is a Retrade?

If you look up "retrade" or re-trade" in the dictionary, you won't find it, even in dictionaries of slang. However, in the parlance of mergers and acquisitions, this is becoming a well-known term. Essentially, a retrade is the practice of renegotiating the purchase price of a deal by the buyer after agreeing to purchase at a higher price. Usually this occurs after the buyer gets the deal under contract and substantial time and investment has been incurred by both sides. In other words, this is a kind of "bait and switch". We are not talking about reasonable price changes as a result of due diligence and inquiry. By contrast, a retrade is a trumped up and disingenuous request for a material change in price and terms that is without merit and which is orchestrated at the end of the process. You know a retrade when you it hits you.

Some buyers as Mike Jagger says in You Can’t Always Get What you Want “are practiced in the art of deception.” They agree to a deal, particularly pricewise, that they really don't to intend honor. They drag the seller through a laborious and expensive due diligence and contract negotiation and believe that because the seller is so invested in the deal that they are worn out and worn down and will agree to a much lower price. Sensing weakness, the buyer goes in for the kill and calls for a retrade. That is how they end up with a bargain price or the price that they intended all along.

How to avoid a retrade? See our next blog coming up soon.