Should I buy this business?

A friend of mine mentioned his family member wants to sell his businiess he has. It's an online site selling retail goods. Been doing it for a few years now. He has proved to have increased sales 15% year over year....

This business is priced much lower (40% lower) than what a business with their earnings size should be priced at, due to not forming an official 'company'... He instead was running it out of his house and tracking sales and profits through auditing his checking account. Never formed a company of any sort...
But I have looked at his financial statements and was able to verify the earnings he stated. (Now if I intend to buy this business, I will take extra measures to ensure the statements are legit and so fourth, but lets just assume they are.)

My thoughts are to buy the business and make it legit (formally) , maintain or grow the earnings for 2 years, then turn around and sell the company...
I would already be buying it at a discount, so I already have "40% equity". Then keep the same or grow more earnings with clean books and records and sell it off...for full value... I am thinking this would be a good "business flip".

Does this sound nuts? Would you do it?