Services

Buy-side Quality of Earnings

Independent verification of earnings, working capital, and cash flow for acquirers of lower middle market businesses.

Schedule a consultationWhat the report covers
800+
Clients served since 2022
150+
M&A deals closed
Owner-led
Run by someone who has bought and sold companies
Two advisors reviewing printed financial documents together at a desk

Overview

A buy-side Quality of Earnings report provides an independent assessment of a target company's financial performance before closing. It tests the seller's reported earnings, evaluates proposed adjustments, and identifies risks that affect price, structure, and financing. Edler Zain performs buy-side Quality of Earnings for independent sponsors, search funds, private equity firms, holding companies, and individual acquirers.

Common challenges

Seller-reported EBITDA and add-back schedules that have not been independently tested

Cash-basis or incomplete books maintained by the seller's bookkeeper

Owner compensation, related-party transactions, and personal expenses

Customer and vendor concentration

Working capital requirements and the appropriate peg

Lender and investor requirements under an LOI timeline

How we help

A standard engagement includes:

Adjusted EBITDA analysis and reconciliation to seller add-backsProof of cash by account and monthRevenue and customer concentration analysisNet working capital trend and peg recommendationManagement question list and findings reviewDeal tax structuring and post-close accounting transition

Who we serve

Acquirers of owner-operated businesses with $500,000 to $15 million of EBITDA, including independent sponsors, search funds, self-funded searchers, private equity firms, holding companies, and family offices.

Related resources

Entrepreneur 360 Assessment
Evaluate your business across eight areas of financial and operational health.
M&A Office Hours
Weekly live session on buying, operating, and selling businesses.
Insights
Articles and guidance for business owners.

Schedule a consultation

Speak with a member of our team about your business. We will review your current situation and outline how we can help.

Schedule a consultationResources

Frequently asked questions

How long does a Quality of Earnings take?

Typically three to four weeks from receipt of complete data. Preliminary findings are shared as the work progresses.

What information do you need from the seller?

General ledger detail, bank statements, payroll reports, tax returns, and customer and vendor data for the periods under review. We provide a request list at engagement.

Do lenders accept your report?

Yes. Our reports are prepared to the standards SBA and conventional lenders expect, and we are available to review findings with them.

How are fees determined?

Fixed fee based on the size and complexity of the target, quoted before work begins.