Quality of Earnings


Ideal For

Buyers that already have a LOI executed and need an in-depth review of the target's financials. Includes a reconstruction of the P&L. Ideal to share results of the assessment with private equity investors, banks and SBA lenders, and non-financial experts.

General Overview

Our Quality of Earnings (QoE) Report delivers an in-depth financial analysis conducted by seasoned CPAs, offering you a detailed and reliable evaluation of your target acquisition's financial health. This comprehensive service encompasses a rigorous review of financial data, contracts, and reporting practices, alongside specialized due diligence analyses, ensuring you make informed decisions with confidence. Tailored to empower prospective buyers with essential insights, our report facilitates a clear understanding of the business's earnings quality, operational financial trends, and potential investment value, complemented by direct access to expert advice.

Quality of Earnings Features

With our Quality of Earnings (QoE) Report, you'll have peace of mind knowing a team of highly experienced and qualified CPAs have exhaustively and diligently combed through your prospective business' financials to ensure everything checks out.

Our QoE Report service may include, but is not limited to, advice and recommendations with respect to the review of financial information, contract and financial reporting matters, and financial due diligence analyses and inquiries. We will review background financial and structural information, analyze historical, as well as review and assess detailed transactions including revenue, expenses, earnings, balance sheet, normalized net working capital, and more. We will deliver a due diligence report which will present (i) an assessment of normalized EBITDA for the past two fiscal years + YTD and (ii) financial review and key trends analysis. The report will cover the Quality of Earnings and may include, as mutually agreed between the parties, other ad hoc analyses which may be useful to you as a prospective buyer and owner.

Interested in our highly robust financial modeling services for your target acquisition? Get our Financial Modeling Service to determine a fair value of your investment based on future cash flows. This is especially useful for clients looking to finance via an SBA loan or private investors that require pro-forma financials and return of investment calculations.

Our turnaround time should be within three to four weeks of engagement and is dependent on timely receiving all the pertinent documentation. A data request will be released upon completion of engagement acceptance.

At the end of our due diligence process, you'll receive a comprehensive Quality of Earnings report in PDF format that will present all of our findings in an easily consumable manner, which you may use to make an effective and informed buying decision, as well as share with any lending partners, including SBA lenders, and investors. You'll be in constant communication with your dedicated M&A CPA throughout the due diligence process and will work with them directly to address any questions or concerns that come up regarding the business' finances.

As with all of our services, our Quality of Earnings (QoE) Report offers unlimited client support so we'll be there to help and offer advice long after we've delivered our finalized report to you. Plus, you get direct access to your dedicated Rapid Diligence Certified Public Account (CPA) via phone, chat and email so they're always just a call away. Once you're ready to move forward or if you have any questions regarding our services, feel free to contact us or book a free introductory consultation.
Everything included in our Quality of Earnings

  • Read available background information (Target’s history, structure, and operations) and internal financial data and management reporting/analysis packages
  • Analyze the methodology for which the financial information for the Target is prepared, including any assumptions, adjustments, and allocations
  • Quality of revenue, expenses, key trends, earnings, management adjustments (add-backs)
  • Review bank statements and perform Proof of Cash analysis
  • High-level analysis and commentary on trends in direct operating and SG&A costs incurred within the business
  • Inquire about out of period, nonrecurring, unusual and non-cash items
  • Identify Customer and vendor concentration
  • Review management proposed adjustments to normalize EBITDA (if any)
  • Review of balance sheet
  • Analyze historical working capital trends, with a focus on seasonality, high/low points, potential normalizing items, and average run rate
  • Analyze a summary of accounts receivable, including aging and bad debt statistics
  • Analyze the composition of inventory and inquire about: Target’s inventory costing methodology, reserve policies, and write-down history, broken down by inventory-type
  • Analyze a summary of account payables, including aging statistics. Inquire about normal and special credit terms (including rebates), significant past due payables and disputes with suppliers
  • CAPEX Analysis: Analyzing capital expenditure trends and requirements.
  • Analyze a summary of prepaid expenses, deferred cost of sales and other current assets to obtain an understanding of related impact on future earnings
  • Identify and assess off-balance sheet liabilities, accrued liability, and other environmental or litigation related liabilities
  • Light tax review with the aim to identify any potential red flags only and not a full tax diligence.
  • Prepare and submit additional data requirements and questions relevant to our scope

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Quality of Earnings

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Free access to all the deal data we've collected:

After assessing countless deals, we’ve gained exclusive insight into what buyers are actually paying for businesses, not simply what sellers are asking.

Does longevity of a business affect its valuation more than growth? What’s the primary difference between an eCommerce business that sells at 3x vs. 7x EBIDTA?

We have the answers and the data to back it up. And we’re willing to share it. 😏