I’m looking for advice on how to structure a business purchase. It’s a seasonal vacation rental multi-unit property. The owners do not have any detailed bookkeeping. Everything is done manually and the 3yr financials they provided leave more questions than answers. So far they have not answered basic questions about the financials such as descriptions of certain expense accounts. I believe they had an accountant create these income statements based on their inputs so they not have any way to verify or backup these numbers other than going through physical invoices. They have owned it for a while and are ready to retire, very old school operation. Their response is basically, you are going to want to run it differently than us so sorry from scratch.
I think there is big potential here to realize efficiencies, increase revenue, do some updating, etc.
As it stands now we don’t want to move forward since the financials are not giving us much confidence and objectively speaking it is not a good investment based solely on the data they provided so far.
My thought was could we do some sort of trial for 1 season and see how it goes while I visit regularly and keep my own set of books based on actual expenses I can verify while learning the business. If it looks good I can complete the purchase and if not, walk away.
Has anyone structured a deal like this? I’m curious if this is common or how it should be structured and what metrics should be used, etc.
I am going to speak to my CPA and attorney as well.