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No matter what they did, it's always better to leave on a positive note. First off, explain the reasons behind your decision — just cut the emotions out and make it pretty cut and dry. And then, the best thing to say is that it's not a good fit for the company. You could even tell them something like, "Hey, this is your strengths and your weaknesses, this is what we've figured out" to help them on their journey.
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