Quality of Earnings (QofE) Review

Clarity before you commit

When you’re assessing a business opportunity, numbers can deceive. A headline profit hides inconsistent cash flow, one‑off windfalls and the kind of creative accounting that makes bad deals look good. Most failed acquisitions have the same root cause: the buyers relied on the seller’s version of the truth.

A Quality of Earnings (QoE) review is your first line of defence. It’s a fast, pre‑offer analysis that answers the questions every acquirer/searcher should ask:

• Should I even make an offer? We analyse the target’s revenue trends, growth trajectory and customer concentration so you know if the business is worth pursuing.
  
• How much should I offer? By normalising earnings, adjusting for one‑off items and benchmarking against industry multiples, we provide a realistic valuation range so you don’t overpay.
  
• Will this qualify for financing? We evaluate the underlying cash flow and debt serviceability to help you determine if lenders will support your bid
  

What’s included in our QoE review

 Our streamlined process is designed to give you rapid insight without the hefty price tag or time commitment of a full due diligence.

Typical deliverables include:

• Revenue and margin analysis: We compare year-over-yearyear growth, identify cyclical patterns and assess how margins stack up against industry benchmarks
• Earnings normalisation: We adjust EBITDA for one‑off items, related‑party transactions and accounting inconsistencies to reveal the true earning power of the business
• Industry comparison: Using market data, we benchmark the target’s performance against its peers to spot outliers and hidden risks
• Financing analysis: We evaluate the business’s ability to support debt, considering cash flow stability and working‑capital needs
• Valuation insights: Based on our analysis, we provide a valuation range grounded in earnings and revenue multiples
• Seller question list: A concise set of probing questions you can put to the seller to validate our findings and uncover potential deal‑breakers

Benefits

 Save time and money
Quickly identify viable opportunities without committing to expensive due diligence on weak targets.

Negotiate from strength
Armed with a realistic valuation and list of issues, you can negotiate with confidence

Avoid bad deals
By understanding revenue quality and margin sustainability early, you steer clear of businesses with hidden weaknesses

 Lay the groundwork for a full FDD
If the deal progresses, the QoE review serves as a foundation for deeper due diligence

Who it’s for

This service is ideal for search fund entrepreneurs, acquirers and investors who need fast, data‑driven clarity before committing to a Letter of Intent.

It’s also a useful tool for business owners preparing to sell who want to understand how buyers will view their numbers, clean up any issues ahead of sale and stand out in the market.
By commissioning a QoE review, sellers can provide credible financials up front and help de‑risk the acquisition for the incoming buyer, increasing trust and potentially accelerating the deal.

Ready to see if your target stacks up?

Don’t guess your way into a deal!
Contact us today to schedule your Quality of Earnings Review and get the clarity you need to make a smart first move.