Spoke with the broker representing a popular local food producer/purveyor. The owner is also selling the RE, which I'm not interested in purchasing at this point. SDE is ~500k, ~300k of which is cash (undeclared revenue).
I asked if the cash revenue can be substantiated and the broker said it has been recorded. Assuming it's legit:
- How do I value the cash portion of SDE? I already mentioned applying a discount to the cash to reflect that I'd be declaring it.
- How difficult will this make debt financing? I'm wondering if / to what extent a seller's note can help.
- How can I think about lease-to-own in this context? Can a rental agreement be incorporated into the seller's note somehow?
Has anyone seen or dealt with this sort of thing before?
Thanks in advance.
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by a searcher
from Concordia University
in New York, USA
in New York, USA
2yrs ago
That's a helluva lotta cash to add-back!?
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by a searcher
2yrs ago
from Creighton University in Omaha, NE, USA
from Creighton University in Omaha, NE, USA
Be cautious, Jacob. If a Seller is willing to be dishonest with the IRS when the consequences can include imprisonment, then how likely is he to be dishonest with a Buyer like you when the consequences are so much smaller?
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by a professional
2yrs ago
from University of California, Berkeley in Pasadena, CA, USA
from University of California, Berkeley in Pasadena, CA, USA
I agree with all of the above. If you do end up moving forward with a seller note, ZimpleMoney.com has a great solution to make sure everything is transparent and properly accounted for.
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