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A Complete Breakdown of a Quality of Earnings Report
June 23, 2022
After an exciting and exhausting search process, you’ve finally found a business that checks all your boxes and you’re excited to move forward to the next steps: Signing an LOI and conducting due diligence. Well, now’s the time to do a mini hoorah to celebrate this milestone and hunker down for the rest of the process....
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Oct 27, 2025
How to Normalize Working Capital in SMB Acquisitions
Working capital is where a lot of buyers quietly overpay. You agree on a headline price, everyone feels good, and then right before closing the peg conversation surfaces and you discover you’re funding yesterday’s receivables with tomorrow’s equity. Normalizing working capital early keeps cash in yo...
Oct 20, 2025
Why Skipping a QoE Is the Most Expensive Way to Save Money
Skipping a Quality of Earnings can feel like saving money. In practice, it’s often the most expensive way to do it. The fee you avoid shows up later as an inflated purchase price, a working-capital miss, or terms you have to unwind after close.
A QoE isn’t a lender checkbox. It’s a practical read...
Oct 13, 2025
Deferred Revenue: How It Skews Earnings and Valuation
Deferred revenue looks harmless on a balance sheet. It is also one of the fastest ways to overstate earnings and overpay if you do not treat it correctly. When customers pay before you deliver, you record a liability called deferred revenue (or customer deposits). Cash comes in now, revenue comes la...
Oct 6, 2025
How to Price Customer Concentration Risk Pre-LOI
Customer concentration risk is one of the fastest ways to misprice a deal. A business that relies on a small number of accounts can look stable on paper and still be fragile in practice. If a top customer churns after closing, your debt service won’t care that the prior three years were strong. The ...
Sep 29, 2025
Key Person Risk: Spotting When a Business Is Too Tied to Its Owner
In small-business acquisitions, there’s a fine line between buying a company and buying a person. Cross it, and you inherit a business that runs on founder muscle memory, undocumented “tricks,” and relationships that do not transfer cleanly. That is key person risk: performance, knowledge, or revenu...
Sep 22, 2025
5 Questions Every Buyer Should Ask About Add-Backs
If you only remember one thing about add-backs, make it this: small shifts in “adjusted” expenses create big shifts in enterprise value. Add-backs are the bridge between messy, real-world financials and the EBITDA you underwrite. Get them right and you price risk accurately. Get them wrong and you p...
