When you buy a business, you are buying assets of a company but in reality, you are buying a stream of earnings to be earned by those
assets. The business assets are a means to make money but if they did not produce a cash flow, you would not be buying those assets.
The assets may have a liquidation value but price that you pay over and above that, the earning power of those assets is the goodwill
of the business.
In order to increase the value of the business, owners will have to have higher income. As a result, there is a possibility that the
owner will claim many of the business expenses are personal and do not need to be continued on after he/she left the business and all
the family members who are on the payroll are not really needed therefore should be added back in the normalized earnings.
Often, owners will state that there is cash sales in the business and that is where the profits can be found.
In my opinion, if you cannot prove the cash sales then they do not exist. If the owner knows that there are cash sales and he knows
that he is selling the business, why does he/she not come clean and deposit the cash in the business to prove what the actual sales are?