Every week we do pre-LOI work for the first-time buyers, going through their deal financials, calculating the net working capital (peg amount) for them, and helping them structure the LOI before it ever lands in front of a seller. And every so often a deal throws up a lesson worth passing along. So here's what happened. A buyer I was working with found a business after months of search that fit his deal criteria, and he went for it. From there he did what every buyer does at this stage. Back and forth with the seller for weeks on price, on terms, on how the whole deal would be structured. And he finally got to the point where he was ready to put the LOI in. That's when the broker called to say the seller was backing out. Not over price. Not over another searcher or a business fit. They had simply decided they didn't want to sell anymore. So he talked with the broker about it. And what came back was something he never would have thought to ask about. The seller was backing out because the business is structured as a C-corp and they had no idea what a sale would actually cost them in tax. And most baby boomers don't. They carry a price in their head. What they don't carry is the number left over after the tax bill. And the gap between those two is exactly where this deal died. My buyer tried to save it. He offered seller financing to soften the hit and spread it out over time, but the seller didn't agree to that either. And that was the end of it. Weeks of work gone, over a question nobody thought to ask at the start. So if you're buying a business, the moment you start having conversations with the seller, make sure they understand their tax bill, the entity structure, depreciation recapture, all of it, and whether they've run it past their CPA. Because if they haven't, you don't have a deal yet. You just have a seller who hasn't thought about what they'll actually walk away with after taxes. redacted