Targets Using Separate Managerial and Tax Accounts

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by a searcher from Harvard University - Harvard Business School
in New York, NY, USA

2yrs ago

Targets Using Separate Managerial and Tax Accounts

Hi,

Has anyone had experience with targets that maintain separate managerial and tax accounts? Specifically, I'm looking into a multi-unit medspa business where the seller has been underreporting revenue for tax purposes. The actual financials are kept in separate software, showing the true financial position of the business, although, I guess, this might not be auditable for QoE. Is this common? Should I continue the discussion (multiple is very low)? Are such companies fundable by investors in a self-funded acquisition (the SBA loan will not be necessary)? Aside from this issue, the business appears legit and appealing. Of course, post-acquisition, the company will immediately abandon this misleading reporting practice.

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reply by a professional 2yrs ago
in San Francisco, CA, USA

This is auditable. Its pretty common for few business to understand profit (understate revenue and overstate expenses)
We can assist you with QoE and give you adjusted EBITDA for multiple calculation and of course, post-acquisition, the company will immediately abandon this misleading reporting practice.