A bowling alley business with liquor license is for sale (asset sale) in my area. I own a commercial property a few blocks away that is going through zoning to become a food hall (a bar & eatery featuring multiple, independent co-located restaurants) and my operating partner and I see several synergies between the two operations. The location is very attractive and we are initiating pre-due diligence.

The bowling alley is on the second floor of a multi-use property. The current owner owns the building and plans to keep the real estate and lease to the new owner. We've met with the broker, have their valuation report and 4 years of pre-covid tax returns showing a business managed to show de-minimis income. It appears he dials up and down the rent he pays himself and a few other deductions, and the bowling revenues are cash-only so who knows. Alcohol sales are decent, payroll seems bloated and we think with a little modernization, fat cutting and facelift we can make it an attractive business.

Any resources, advice or suggestions on diligence I can perform before incurring accounting expenses via a Quality of Earnings report would be appreciated. I have never underwritten an existing business, let alone one stuck in the 1950's, operating on cash and with owner who doesn't use a smartphone so I'm guessing book/record keeping is non-existent or un-reliable.