Independent QoE analysis for buy-side and sell-side M&A transactions — delivering accurate normalized EBITDA, working capital benchmarks, and deal-critical financial insights for private company transactions across Southern California.
Discuss Your TransactionA Quality of Earnings (QoE) report is an independent financial analysis of a target company's historical earnings that goes well beyond what a standard audit or financial statement review provides. It answers the question every deal participant needs answered before signing: Is the EBITDA we're pricing off of real, recurring, and representative of the business going forward?
A well-executed QoE identifies adjustments — both up and down — to reported earnings, flags non-recurring items, examines revenue recognition practices, evaluates working capital trends, and surfaces financial risks that could affect deal pricing, structure, or terms. It is the primary tool buyers use to validate management's representations and the primary tool sellers use to present earnings credibly to the market.
Our QoE professionals bring both financial diligence experience and valuation expertise to each engagement — a combination that allows us to connect earnings quality directly to enterprise value implications.
A buy-side QoE is commissioned by the acquirer to independently verify the target's earnings and financial condition before committing to a purchase price. Our buy-side engagements are designed to identify adjustments to EBITDA that affect pricing, surface risks that affect deal structure, and provide the buyer with a clear-eyed view of what they are actually acquiring.
What we focus on:
A sell-side QoE (also called a vendor QoE) is prepared on behalf of the seller prior to going to market. It anticipates buyer diligence questions, presents EBITDA adjustments in a defensible and well-documented format, and significantly streamlines the buyer's diligence process — reducing deal timeline, improving buyer confidence, and supporting the seller's price expectations.
Benefits of a vendor QoE:
The core of any QoE is the EBITDA bridge — a clear, line-by-line reconciliation from reported earnings to adjusted EBITDA. We identify and quantify every adjustment category:
Not all revenue is equal. We assess the sustainability, predictability, and quality of the revenue base:
Working capital is one of the most negotiated elements of any deal. Our working capital analysis establishes a defensible normalized peg and flags any trends or anomalies that may affect the closing statement:
The definition of net debt can significantly affect closing proceeds. We perform a comprehensive review of balance sheet items that buyers typically characterize as debt-like:
Understanding the true cash generation of the business requires a clear picture of capital expenditure requirements and working capital consumption:
Beyond the numbers, our QoE team evaluates qualitative and structural risks that could affect deal execution or post-close performance:
Platform acquisitions and add-on targets requiring rigorous, time-sensitive financial diligence that integrates with broader deal execution.
Corporate development teams evaluating targets where independent financial diligence provides an objective check on management projections.
Business owners preparing for a sale who want to present their earnings story credibly and get ahead of buyer diligence questions.
Senior lenders and credit investors requiring independent verification of borrower earnings quality in connection with acquisition financing.
We deliver focused, actionable QoE reports on deal timelines. Contact us to discuss scope and availability.
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