Rick Jordan

The sellers could go away if they were buying the business.

So it becomes future profits that are just kind of baked in.

Now we're really down to 300K a year that the company was making.

But then there was a sales tax liability that we did not know existed.

And this is where a lot of the shareholders are like, you should have done your diligence in all of this.

We did.

We called the state.

We called the IRS.

We got all the forms done and everything came back that they were paid.

The problem is that it wasn't disclosed that a sales tax audit was in progress by the state.

And that's not something that the state will ever disclose.

It was only 21 days before.

So within a month before we actually closed on this, that one of the sellers signed an extension on that audit with the state and still didn't tell us.

It was about five months after that acquisition that we got a phone call from the state that said, hey, we finished the audit.

But even so, like still filing sales tax returns during those time periods and nothing was ever brought up about five months later.

And that was multiple six figures.

So now you have this company that was producing around 600K in net income every year, minus the employee or the owner's salaries.

Really, they were only making 300.

And now you get this multiple six figure liability.

It makes the company worth zero out of the gate because every company is typically bought on a multiple.