Anyone have stats on how many deals are renegotiated post LOI?

May 13, 2025
by a searcher in New Jersey, USA
As we all know, with ETA becoming the hottest new trend on social media, we are in a red hot seller's market. I have seen brokers list businesses with <500K SDE at outrageous multiples (5x-10x in a few cases), and I see those deals eventually go under contract.
How are searchers justifying these asking prices?
I understand they could raise more equity or get a bigger seller note to close the SBA funding gap, but it just doesn't make sense to me. When I speak to brokers, many of them are complaining about searchers not having the money to close deals so I doubt they are raising more equity. And in regards to a seller's note -- it's still debt. If the business only has 250K-300K SDE, how are you paying yourself and affording 1.5-2M debt service?
I suspect many searchers aren't properly modeling the numbers and just agreeing to the deal to lock it up, then anticipate re-trading post LOI. But I think that is a risky, and potentially, expensive strategy if you spend money on DD.
Does anyone have insight into how these deals are getting done and if they are being renegotiated post LOI?
from Carnegie Mellon University in Dallas, TX, USA
from The University of Chicago in Santa Cruz, CA, USA