I'm under LOI (nonbinding) with a seller and we have been in due diligence for the past couple months. I've uncovered some risk factors that make the deal no longer viable. I've developed a good relationship with the broker and seller, so I want to make sure I approach this correctly.

1. What is the best vehicle for breaking the news? Should I have this conversation over the phone with both the broker and seller? Should I notify only the broker first so he can tell the seller?

2. What comes next? Any paperwork we need to put together to acknowledge the termination of the deal? We have not signed the APA