Quality of Earnings
QoE reports delivered in as little as 2–3 weeks — defending valuation and accelerating close, for buyers and sellers.
A Quality of Earnings (QoE) analysis is a comprehensive review of a company's financial records to assess the sustainability and accuracy of its earnings.
It helps identify anomalies, non-recurring items, or accounting practices that may distort true performance — giving a clearer picture of operational health and profitability, and helping both buyers and sellers address concerns upfront for a faster, more efficient transaction.
QoE Report Contents
Executive Summary
- Summary of the company's financial performance.
- Key adjustments to earnings.
- Major risks or opportunities identified.
- Conclusion on the quality and sustainability of earnings.
Revenue Analysis
- Revenue breakdown by product, service, geography, or customer.
- Analysis of recurring vs. non-recurring revenue.
- Identification of revenue concentration risks.
- Examination of revenue recognition policies.
Expense Analysis
- Breakdown of major expense categories (COGS, SG&A, R&D).
- Identification of non-recurring or unusual expenses.
- Analysis of expense trends and drivers.
- Evaluation of cost structure efficiency.
EBITDA Adjustments
Normalize earnings to reflect true operating performance · Adjustments for non-recurring items · Adjustments for owner-related expenses · Adjustments for non-operational items
Cash Flow Analysis
Analysis of operating, investing, and financing cash flows · Comparison of cash flow to reported earnings · Assessment of working capital requirements · Analysis of cash flow drivers and sustainability
Appendices
Detailed financial statements · Supporting schedules (revenue by customer, expense breakdowns) · Methodologies and assumptions used in the analysis
QoE for Buyers
Mitigate Risk: Avoid overpaying or acquiring a business with hidden liabilities.
Accurately Value: Justify purchase price based on normalized earnings.
Improve Operational Insights: Plan for post-transaction cash flow needs and avoid liquidity issues.
Support Financing: Secure financing more easily by demonstrating the stability of the target's earnings.
QoE for Sellers
Maximize Sale Price: Provide a clear, data-backed explanation of your company's earnings and valuation.
Showcase Strengths: Build trust and credibility upfront and make your business more attractive to buyers.
Improve Negotiation Position: Equip yourself with data to defend valuation and leverage better deal terms.
Speed the Process: Address potential financial questions upfront and streamline due diligence.
CFOs who have sat on your side of the table.
Experienced Professionals
Our team has prepared high-quality QoE reports that increased valuation and decreased time to close for hundreds of transactions.
Industry Expertise
We are CFOs who have sat in your position — across healthcare, business services, manufacturing, and energy.
Quick Turnaround
We deliver our QoE reports in as little as 2 to 3 weeks from start to finish.
Confidential and Reliable
We uphold strict confidentiality and deliver reliable, detailed reports you can trust.
Let's start the conversation.
Tell us about your business and one of our specialists will reach out — usually within one business day.