Quality of Earnings
Also called QoE
An accountant's review, commissioned by the buyer, that tests whether reported and adjusted earnings are real and sustainable.
In a sale
What it changes in a sale
A Quality of Earnings review is where the buyer's accountants rebuild adjusted EBITDA from the records. It tests whether revenue ties to cash, whether each add-back holds, and whether the earnings will continue. A founder who has already tested the numbers knows what the review will find before it starts.
Where it comes up
Read it in context
In the articles
- An add-back is an argumentAdjusted EBITDA is built, not declared, and the buyer's accountants will rebuild it.
- Diligence yourself firstEvery business has issues. The question is who finds them.
- What the buyer's memo says about youBefore any offer, someone writes an internal memo. Here is what is in it.
- Multiple entities, one storyFounders build in pieces. Buyers buy a whole.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.