Quality of Earnings (QoE) Report & Analysis
Independent QoE Analysis to Validate Adjusted EBITDA and Support M&A Diligence
A Quality of Earnings (QoE) report provides an independent, in-depth assessment of a company’s financial performance, focusing on the sustainability, accuracy, and reliability of earnings. As a critical component of M&A diligence and financial due diligence, a QoE analysis normalizes reported results to present a clear view of Adjusted EBITDA and true cash flow generation.
Our QoE services help business owners, private equity firms, and strategic buyers make informed decisions by identifying key risks, validating earnings, and enhancing transparency ahead of a transaction.
What Is a Quality of Earnings Report?
A QoE report evaluates the quality, consistency, and sustainability of a company’s earnings by analyzing revenue streams, cost structure, and accounting practices. Unlike an audit, a QoE analysis focuses on earnings normalization and the calculation of Adjusted EBITDA, which is a key driver of valuation in mergers and acquisitions (M&A).
Our QoE & Financial Due Diligence Services
We deliver comprehensive QoE analysis and financial due diligence to support both buy-side and sell-side transactions.
Revenue Quality & Sustainability Analysis
- Breakdown of revenue by customer, product, and geography
- Identification of recurring vs. non-recurring revenue
- Evaluation of pricing trends and revenue visibility
Expense Review & EBITDA Normalization
- Identification of discretionary and owner-related expenses
- Removal of non-recurring and non-operating costs
- Development of a fully supported Adjusted EBITDA
Customer Concentration & Risk Analysis
- Assessment of customer concentration and dependency
- Analysis of retention, churn, and key account stability
Non-Recurring Items & Earnings Adjustments
- Identification of one-time gains and losses
- Normalization of earnings for comparability and valuation
Accounting & Financial Statement Review
- Evaluation of accounting policies and consistency
- Adjustments to align with market and industry standards
Adjusted EBITDA: The Foundation of Valuation
A central output of our QoE report is the calculation of Adjusted EBITDA, which reflects the company’s true operating performance and cash flow potential.
Our deliverables include:
- Detailed Adjusted EBITDA bridge (Reported EBITDA to Normalized EBITDA)
- Supporting schedules and adjustment rationale
- Clear documentation for buyers, lenders, and investors
Why QoE Matters in M&A Transactions
A Quality of Earnings analysis is essential in M&A diligence because it:
- Validates Earnings – Confirms the accuracy and sustainability of reported financials
- Supports Valuation – Provides a defensible basis for pricing using Adjusted EBITDA
- Identifies Risks – Highlights financial, operational, and customer-related risks
- Improves Deal Outcomes – Reduces surprises during buyer diligence
When to Engage a QoE Provider
Our QoE and financial due diligence services are typically engaged for:
- Sell-side preparation (preparing a business for sale)
- Buy-side diligence (evaluating an acquisition target)
- Private equity investments and exits
- Debt financing and refinancing transactions
Our Approach to QoE Analysis
We combine deep experience in financial due diligence, M&A advisory, and valuation services to deliver a practical, transaction-focused QoE analysis. Our process is efficient, collaborative, and tailored to each client’s specific objectives and timeline.
Get a Quality of Earnings Report
Looking for a reliable QoE provider?
Contact us today to learn how our Quality of Earnings analysis and Adjusted EBITDA expertise can support your next transaction.
