Business with mostly cash income

by a searcher from Columbia University - Columbia Business School

3 years ago

I have narrowed down my self funded search to a few potential acquisition targets. This one landscaping and lawncare company does ~$1M gross sales, but tax return shows $300K. How can I do due diligence to confirm the cash component of the business and any recommendations on due diligence. Many thanks.

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intermediary from University of Pennsylvania - The Wharton School

As others have indicated, it's probably best to walk away from this one. But if you want to dig deeper, the IRS has an Audit Techniques Guide for Cash Intensive Businesses that might be helpful. See https://www.irs.gov/businesses/small-businesses-self-employed/cash-intensive-businesses-audit-techniques-guide-table-of-contents

3 years ago | like reply | 0 likes

searcher

As others have said - run away!

3 years ago | like reply | 0 likes

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