Quality of Earnings Analysis
Close on numbers that hold up
Our Quality of Earnings (QoE) reports test a business’s earnings, working capital and revenue against its books, so buyers, sponsors, lenders and sellers can price and close with confidence.
- Fixed fee, quoted in writing
- Most take 2–4 weeks
- 350+Quality of Earnings reviews completed
- $1B+in combined transaction value
- Nationwideremote, serving clients across the US
What you get
Clarity on the numbers before you commit capital
A QoE answers one question: are the earnings you’re paying for real, and will they last?
- Adjusted EBITDA
Pay for the earnings that are really there
We test reported EBITDA and every add-back against the books, so your price reflects sustainable earnings.
- Net working capital
A working capital target you can defend
Every QoE includes net working capital analysis and a working capital target (peg), grounded in the numbers.
- Report & review call
Findings you can act on before closing
A clear written report and a review call with you, your investors or your lender, while there is still time to act.
Who it’s for
Built for every side of the deal
- 01Searchers and business buyers
Know the earnings are real before you sign
Independent diligence for self-funded and traditional searchers and strategic acquirers, so you can borrow and close with confidence.
For searchers - 02Independent sponsors, private equity and family offices
Underwrite on earnings that hold up
A well-supported view of adjusted EBITDA and net working capital for your capital partners and credit committee, including multi-entity and carve-out deals.
Transaction advisory - 03Lenders and SBA lenders
Numbers your credit committee can trust
Lender-ready QoE reports for acquisition financing, including SBA 7(a) deals with a purchase price of $3 million or more (QoE required for applications SBA receives on or after October 1, 2026). Every report includes a proof of cash and net working capital analysis.
SBA QoE pricing - 04Sellers and their advisors
Protect your price and reduce retrades
A sell-side QoE tests your add-backs before a buyer’s team does, with buyer-ready financials and a report you can share in the data room.
Sell-side support
What’s included
Every number that drives your price, tested
Every QoE includes the first seven. The lender-ready presentation is added when an SBA lender requires the QoE.
Adjusted EBITDA
Reported earnings normalized for one-time items and owner add-backs.
Add-back testing
Every owner perk and one-time item tested against support.
Net working capital
Working capital trends and a working capital target (peg), in every QoE.
Revenue quality
Revenue recognition and trends, one of our most common findings.
Proof of cash
Reported results tied to bank activity, in every QoE.
Seller interviews
Structured calls to clarify operations and accounting.
Report & review call
A detailed written report, walked through with your deal team.
Lender-ready presentation
When an SBA lender requires the QoE: earnings presented the way your lender reviews debt service coverage.
Your written quote lists exactly what’s in scope. Add-ons include extra entities or locations, rush timing and reliance letters.
Process
How our due diligence process works
A process built from 350+ deals. We work in two phases, reconciling the books first and then finalizing with the seller, so the big issues come up early. You get a weekly update the whole way through.
- 1
Kickoff
We connect directly with the seller and send a short, practical request list to get data flowing.
- 2
Analysis
We gather financial data, reconcile the books, and analyze trends and adjustments.
- 3
Seller interviews
Structured calls with the seller to clarify operations and accounting.
- 4
Report & review call
Adjusted EBITDA, proof of cash, net working capital and every finding in a detailed report, walked through on a call.
Pricing
Know your fee before we start
Every QoE is a fixed fee, quoted in writing. Fees scale with deal size and complexity.
QoE, deals under $5MM
About $15,000
Purchase price under $5MM
QoE, $5MM to $15MM deals
$18,000–$25,000
Also any SBA Lender-Ready QoE, at any deal size
QoE, deals over $15MM
From $25,000
Any buyer on a deal over $15MM
Sell-Side QoE
From $25,000
Owners preparing to sell
Compare
QoE vs. audit vs. valuation
Three different tools. Here’s what each one answers.
| Quality of Earnings | Audit | Valuation | |
|---|---|---|---|
| The question it answers | Are the earnings real, and will they last? | Do the financial statements comply with GAAP? | What is the business worth? |
| Main focus | Earnings: adjusted EBITDA, proof of cash, net working capital and its target, and key operating metrics | Balance sheet and GAAP compliance | A value conclusion for the business as a whole |
| How it’s done | A consulting engagement, typically performed by CPAs | A regulated procedure with specific required standards | An estimate built on the business’s earnings, assets and market |
| How it helps a buyer | Shows performance you can project forward, before you price and finance the deal | Gives assurance on historical statements; complements a QoE when available | Helps set or test a price; it relies on earnings a QoE can verify |
On deals where audited financials are available, the audit is complementary to the QoE.
Client perspectives
Thorough diligence from a team that answers
Experience matters. Midwest CPA is a specialized transaction advisory CPA firm and due diligence provider, with more than 350 QoE reviews completed.
“Chris and Alyssa did a Q of E for me. Went above and beyond. Incredible work. … Extremely hard workers answering emails at all times of the day.”
“Midwest was able to turn around the report in 3-4 weeks as promised and knocked it out of the park.”
“He started as my financial due diligence provider, putting together a comprehensive QoE, and has become a trusted partner that I plan to use for all bookkeeping and financial operations post-acquisition.”
“Chris is an absolute top notch M&A financial due-diligence provider. He and I have worked on many, many deals together.”
“He assisted me with my QoE for my business acquisition and he and the team performed the task efficiently and effectively.”
“His firm added a lot of value during the due diligence period and helped in closing the transaction successfully.”
Industries
Our clients have bought in a variety of industries
Midwest CPA advises self-funded searchers, traditional searchers, private equity groups, family offices and strategic acquirers across these industries.
- HVAC
- Plumbing
- Electrical contracting
- Landscaping
- Manufacturing
- Trucking, logistics and transportation
- Real estate and construction
- Government contracting
- Professional services
- Marketing agencies
- Healthcare
- E-commerce
- Retail
- Hospitality and restaurants
FAQ
Quality of Earnings: frequently asked questions
What is a Quality of Earnings (QoE) report?
A QoE is an independent analysis of a business’s historical earnings and the core of financial due diligence. It tests the seller’s numbers, shows sustainable earnings (adjusted EBITDA), ties results to the bank (proof of cash) and analyzes net working capital, so buyers, lenders and investors decide on tested numbers.
What does a Midwest CPA QoE include?
Every QoE includes adjusted EBITDA and add-back testing, a proof of cash, net working capital analysis with a working capital target (peg), revenue quality, seller interviews, and a databook with a review call. A presentation slide deck is available as an add-on, quoted by scope. When an SBA lender requires the QoE, earnings are also presented the way the lender reviews debt service coverage.
How long does a QoE take?
Most QoEs are completed in 2 to 4 weeks, as long as the seller provides data and answers questions promptly. We recommend budgeting about 4 weeks in your diligence timeline.
How much does a quality of earnings report cost?
At Midwest CPA, QoE pricing is based on deal size: about $15,000 for deals under $5 million, and $18,000 to $25,000 for deals of $5 million to $15 million or when an SBA lender requires the QoE. Deals over $15 million and sell-side QoEs start at $25,000. See QoE pricing.
Is your QoE fee fixed or hourly?
Fixed. You get a written scope and a flat price before we start, based on the deal’s complexity and timeline. There’s no hourly billing. If the scope changes, we agree on it with you before doing the extra work.
Does the SBA require a Quality of Earnings report?
For SBA 7(a) acquisition loans with a business purchase price of $3 million or more, a QoE is required for applications SBA receives on or after October 1, 2026. Your lender will confirm what your deal needs.
Is a QoE different from an audit?
Yes. An audit is a regulated procedure focused on the balance sheet and GAAP compliance. A QoE is a consulting engagement, typically done by CPAs, focused on the income statement: the earnings and operating metrics a buyer can project forward. When audited financials exist, the audit complements the QoE.
Is my deal too small for a QoE?
A QoE is a real investment. But unless you could easily afford to lose the entire purchase price, it makes sense to protect yourself by having an expert analyze the financials. For deals under $5 million, a QoE costs about $15,000.
When should I reach out to you?
Any point in your search. The best time is when you’re close to submitting an LOI on a deal you’re serious about, so diligence can start right after it’s signed.
Do you perform sell-side Quality of Earnings?
Yes. Time and surprises are what kill deals. A sell-side QoE tests your add-backs and earnings before buyers do, so issues come up early and you have more certainty to close. You get buyer-ready financials and a report you can share in the data room. Sell-side QoEs start at $25,000.
Who does the work on my QoE?
Experienced people, not a B team. The people responsible for your project are U.S.-based CPAs, supported by our team here and abroad, and they walk you through the report on a review call. Midwest CPA has completed more than 350 QoE reviews.
Can you help after the deal closes?
Yes. Midwest CPA also provides monthly accounting, payroll, tax and fractional CFO services, so the team behind your diligence can support the business after it closes. Accounting and tax services.