7 min read Deal Process

Negotiating TDD Findings

How to use technical findings in deal negotiations

TDD findings should inform deal negotiations, from purchase price adjustments to specific contractual protections.

Negotiation Levers

1. Purchase Price Adjustment

Direct reduction based on quantified remediation costs

Best for: Clear, quantifiable issues with agreed-upon costs

2. Escrow Holdback

Funds held in escrow pending remediation or issue resolution

Best for: Issues with uncertain scope or timeline

3. Seller Remediation

Seller commits to fix issues before or after closing

Best for: Issues seller can efficiently address

4. Earnout Adjustment

Tie earnout payments to successful remediation milestones

Best for: Long-term issues affecting business performance

5. Representations & Warranties

Specific warranties around technology conditions

Best for: Risk transfer and indemnification

6. Working Capital Adjustment

Include technology remediation in working capital calculation

Best for: Immediate post-close requirements

Presenting Findings to Sellers

Lead with facts, not opinions
Provide clear documentation of findings
Offer remediation cost estimates
Propose reasonable solutions
Avoid "gotcha" dynamics

Key Takeaway: The goal is a fair deal, not maximum extraction. Adversarial negotiations often backfire post-close when you need seller cooperation.