Quality of Earnings Analysis
We help you mitigate risk so you can confidently close on your business acquisition.
Experience Matters
When you need quality of earnings analysis, experience is crucial. As a specialized transaction advisory CPA firm and due diligence service provider, Midwest CPA excels in delivering thorough and insightful quality of earnings (QoE) reports.
Over 65
Transactions
In the last 12-months alone
How Our Due Diligence Process Works
The primary reason for conducting a QoE is its direct impact on the purchase price. A QoE evaluates three critical factors, helping buyers assess if the business price is reasonable.
Enterprise Value
Through due diligence with mergers and acquisitions, enterprise value is determined by taking a multiple of EBITDA or similar financial measure. We will analyze the reported financial earnings to determine if that financial measure is accurately reported as well as any key factors that impact the multiple.
Net Debt
Our Merger acquisition due diligence assesses all debt-like obligations and highlight any potential reductions to enterprise value and future cash flows.
Net Working Capital
If less than a normal level of working capital is delivered at the closing of a transaction the buyer may be required to contribute additional capital in order to fund operations.
A comprehensive analysis of the business is needed to ensure adequate working capital is delivered at closing.
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 in evaluating acquisitions with transaction values up to $50 million.
- HVAC
- Government Contracting
- Professional Services
- Retail
- Landscaping
- E-Commerce
- Healthcare
- Manufacturing
- Plumbing
- Trucking Logistics & Transportation
- Hospitality & Restaurants
- Real Estate & Construction
- Marketing Agencies
- Electrical Contracting
Frequently Asked Questions
We recommend that our clients budget 4 weeks for the quality of earnings analysis in due diligence for mergers and acquisitions, including operational due diligence and due diligence audit reviews.
The project is often completed in 2-3 weeks as long as the seller provides data and answers questions within a reasonable timeframe.
A quality of earnings report can be a substantial investment.
That being said unless you can afford to easily lose the entire purchase price of the business you are buying the benefits from m and a due diligence accounting makes sense to protect yourself by having an expert analyze the financials.
Were happy to speak with you at any point in your search.
The best time to reach out is when you are getting close to submitting an LOI on a deal you are serious about for us to perform due diligence and secure your investment.
An audit is different from a QoE in a variety of ways. For one an audit is a regulated procedure that has specific guidelines for how it needs to be completed. A QoE is a consulting engagement that can technically be done by anyone although they are typically done by CPAs.
An audit is much more balance sheet focused while a QoE is more focused on the income statement. The audit is looking to confirm that the financials comply with GAAP while a QoE helps a buyer understand the financial performance of the company that can be projected into the future as well as the key operating metrics.
On deals where audited financials are available the audit is complimentary to the QoE.
