Quality of Earnings
The number everyone negotiates from ought to be true. Our QoE reads like it was written by someone who has run a P&L, because it was.
Our view
EBITDA validation, revenue quality, working-capital dynamics, and the adjustments a counterparty's advisor will actually accept. Most quality-of-earnings work tests the general ledger and stops there. We test earnings against how the business actually runs, because that is where the adjustments either hold or fall apart under a skeptic's questions. The result is a report a buyer, a seller, or a credit committee can negotiate from without discovering a surprise at the wire.
When this is the work
When the earnings number has to hold up.
A transaction or a credit is being priced off EBITDA, and no one has independently tested what that EBITDA really is. We build the evidence before the counterparty builds the objection.
- Sellers preparing for a process who want the LOI they receive to be the LOI that closes
- Buyers and investors validating a target's earnings before wire day
- Lenders and credit funds re-underwriting a facility on EBITDA that has not been independently tested since close
The Ore to Edge Discipline
The same three-phase discipline on every engagement, adapted to the demands of this work. See the full discipline.
Assay and refine
- Partner: understand how the business actually earns, by job, channel, and customer
- Collect: the ledger, the operating data, the bank record, and the contracts behind revenue
- Filter: revenue quality and concentration, and where reported earnings and operating reality diverge
A clear read on revenue quality and the earnings the business truly produces
Alloy and form
- Build the EBITDA adjustment schedule with documentation a skeptic can audit
- Normalize working capital and pre-arm the peg debate
- Tie out proof of cash against the reported result
An adjusted EBITDA and working-capital position with evidence behind every line
Forge and hone
- Defend the findings through diligence, committee, and counsel
- For stressed credits, produce recovery-grade earnings evidence built to survive scrutiny
A report that holds through negotiation rather than reopening it
What you get
Earnings evidence that survives diligence.
- Revenue quality and concentration analysis
- EBITDA adjustments with documentation a skeptic can audit
- Working-capital normalization and the peg debate, pre-armed
- Proof-of-cash tie-outs
- For stressed credits: recovery-grade earnings evidence built to survive committee and counsel
Common questions
Quality of Earnings, in plain terms.
Do you work sell-side or buy-side?
Both, plus lender-side. Never two sides of the same transaction.
How long does a QoE take?
Typically three to five weeks for a middle-market company, depending on the state of the records and how much operating data has to be reconstructed.
How is an operator-built QoE different?
We test earnings against how the business actually runs, through job costing, channel margins, and customer behavior, not just against the general ledger.
Related capabilities
Where this leads
Exit Readiness & Succession
The preparation that makes the QoE come out clean
Read more →Distressed M&A & Capital Solutions
When the resolution is a transaction
Read more →Collateral & Borrowing-Base Integrity
The collateral truth beside the earnings truth
Read more →Lender-Side Workout Advisory
Recovery-grade earnings evidence for a stressed credit
Read more →