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Quality of Earnings

Analysis of earnings quality and sustainability so buyers, sellers and lenders can trust the numbers behind a deal.

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The Real Story Behind the Numbers

Reported earnings rarely tell the whole story. A quality of earnings analysis separates sustainable, recurring performance from one-time events, owner-related expenses and accounting adjustments, so every party knows what they're buying, selling or financing.

For sellers, a QoE completed before going to market surfaces issues early and supports your asking price. For buyers and lenders, it tests the numbers before money changes hands. Either way, it shortens due diligence and reduces surprises at the closing table.

What We Do

1

Earnings Normalization

Identifying and adjusting for non-recurring, non-operating and owner-related items.

2

Adjusted EBITDA

Building an EBITDA figure that reflects true operating performance and is documented for buyer review.

3

Revenue Quality

Reviewing customer concentration, contract terms, pricing and churn to assess how durable revenue really is.

4

Working Capital Analysis

Measuring normal working capital levels and supporting a fair peg for the purchase agreement.

5

Trend and Variance Analysis

Explaining what changed, when and why, so there are no open questions in diligence.

Who Is This For

  • Sellers preparing for a sale who want to control the story
  • Buyers and private equity firms evaluating a target
  • Lenders underwriting acquisition financing
  • Owners considering a recapitalization or partner buyout

Meet the Team

Our quality of earnings team works alongside your transaction advisors from letter of intent through closing.

Frequently Asked Questions

What is a quality of earnings report?

It tests whether a company's reported earnings are accurate and sustainable. We adjust for one-time items, owner-related expenses and accounting choices to arrive at adjusted EBITDA and a normal level of working capital.

When should a seller get a quality of earnings report?

Before going to market. A sell-side report surfaces issues early, supports your asking price and shortens the buyer's due diligence.

How is a quality of earnings report different from an audit?

An audit gives an opinion on whether the financial statements are fairly presented. A quality of earnings report focuses on whether earnings will continue and what they mean for price. Buyers often ask for one even when audited statements exist.

Evaluating a deal?

Let's look at the numbers behind the numbers.

Connect With Us Call: (610) 544-5900

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