Continuing a recent discussion with our QoE project managers on common themes that surface during SMB transactions, another area that frequently requires attention is COGS and gross margin. Revenue may appear solid at first glance, but validating the underlying cost structure often reveals adjustments that can materially impact profitability. A few examples that show up often: - Inventory inaccuracies due to limited cycle counts or lack of regular physical reconciliations. - Incomplete landed cost tracking, where freight, duties, tariffs, and other acquisition costs are not fully allocated to inventory. - Estimated COGS methodologies, where a flat percentage is applied instead of using actual product or job costs. - COGS classified as Operating expenses, artificially inflating reported gross margins. - Lack of work-in-progress tracking in construction, manufacturing, and other project-based businesses. - Outdated standard costs that haven't kept pace with supplier price increases or changing production costs. Most of the time these issues aren't intentional, they simply reflect accounting and operational processes that didn't evolve as the business scaled. Curious if other searchers have encountered margin-related surprises during diligence, or if there are other common issues you've seen.