Financial Due Diligence for a Tourism Lodge Acquisition

A Namibian high-net-worth individual seeking to acquire a portfolio of three tourism lodges in the Damaraland and Skeleton Coast areas, with a combined asking price of NAD 38 million.

The buyer had agreed on a headline price but had not commissioned any financial due diligence. The seller's financial statements were prepared on a cash basis and did not reflect depreciation, deferred maintenance obligations, or the correct lease terms for the concession agreements held with the Ministry of Environment, Forestry and Tourism. The buyer needed an independent assessment before signing the sale agreement and had a 21-day exclusivity window.

We conducted financial and tax due diligence on all three entities within the exclusivity period, reviewing five years of financial records, the underlying concession agreements, employment contracts, and the outstanding NamRA tax compliance position for each entity. We identified NAD 4.1 million in undisclosed deferred maintenance and a disputed NamRA assessment against one of the entities that the seller had not disclosed. We prepared a due diligence report with findings and advised the buyer on deal structuring, recommending an asset purchase over a shares acquisition to ring-fence the undisclosed tax liability.

Due diligence completed within the exclusivity window. The buyer renegotiated the purchase price down by NAD 4.8 million on the basis of the findings. The transaction was restructured as an asset purchase. The NamRA liability remained with the seller. The acquisition was completed and the lodges are now under new ownership with clean financial records prepared by our office from the acquisition date.