Quality of Earnings Analysis
Make informed investment decisions with our comprehensive Quality of Earnings analysis. Get detailed insights into financial performance, risks, and opportunities.
What is a Quality of Earnings Review?
Think of it as a financial x-ray for your business. While your financial statements show what happened, a Quality of Earnings (QoE) review reveals the real earning power behind those numbers.
A QoE digs deeper than traditional financial statements to assess whether your company's earnings are sustainable, recurring, and accurately stated. It identifies adjustments to EBITDA that can significantly impact your company's valuation.
"In M&A transactions, reported earnings can be misleading. One-time gains, aggressive accounting, or hidden liabilities can distort the true financial picture. A QoE cuts through the noise."
What We Analyze
- Revenue quality and sustainability
- EBITDA adjustments and normalizations
- Working capital requirements
- Customer concentration risks
- One-time vs. recurring expenses
- Hidden liabilities and off-balance sheet items
Why You Need a Quality of Earnings Review
Whether you're buying or selling a business, understanding your true financial picture is essential. Here's what every business owner needs to know.
For Buyers
Make Informed Investment Decisions
You're about to make one of the largest investments of your career. A QoE report protects you from overpaying and surfaces risks before they become your problem.
- Avoid Overpaying
Validate that earnings are real, recurring, and accurately stated
- Uncover Hidden Risks
Identify customer concentration, pending litigation, or operational issues
- Negotiate with Confidence
Use data-driven insights to justify your offer price
- Satisfy Lenders
Banks and investors often require QoE reports for financing
For Sellers
Maximize Your Valuation
You've built your business – now get what it's worth. A sell-side QoE helps you command a stronger valuation and speed up the sale process.
- Support Your Asking Price
Document defensible EBITDA adjustments that increase value
- Speed Up the Sale
Proactively address buyer concerns before they arise
- Stay in Control
Identify and address issues before buyers find them
- Build Buyer Confidence
A clean QoE signals a well-run, transparent business
Don't leave money on the table or inherit someone else's problems.
A Quality of Earnings review informs transaction decisions; it does not guarantee a valuation, financing outcome or successful acquisition.
Quality of Earnings (QoE) Review
Ensuring Transparency, Accuracy, and Deal Readiness
Our Quality of Earnings review assesses financial information for a sale, investment or strategic decision. We serve buy-side and sell-side clients with analysis of revenue, earnings, working capital and identified risks.
Revenue Quality & Sustainability Analysis
- Breakdown of revenue streams to distinguish recurring vs. non-recurring income
- Contract retention trends and customer concentration risk assessment
- Validation of pipeline credibility and revenue forecast adjustments
Profitability & EBITDA Normalization
- Adjustments for non-recurring, discretionary, and owner-related expenses
- Margin analysis, benchmarked against industry standards
- Identification of potential cost savings and efficiency improvements
Cash Flow & Working Capital Assessment
- Evaluation of working capital needs and liquidity position
- Days Sales Outstanding (DSO) trends and cash flow constraints
- Forecast of future investments and operational expenditure
Risk & Compliance Evaluation
- Internal controls and financial risk assessment
- Compliance with accounting standards (e.g., ASC 606) and regulatory requirements
- Identification of key-person dependencies and operational vulnerabilities
Valuation Sensitivity & Deal Readiness
- Financial modeling for valuation discussions and scenario analysis
- Identification of synergies for potential buyers or investors
- Support for buyer due diligence and transaction negotiations
Other Assessments
- Technology infrastructure and integration feasibility analysis
- Federal and state historical tax filing validation
- Sales and use tax analysis to validate nexus thresholds
Why Choose Our QoE Analysis
Make confident decisions with our thorough and insightful financial analysis
Transaction Support
Comprehensive analysis supporting M&A, private equity investments, and strategic decisions.
Risk Mitigation
Identify and assess financial and operational risks before they impact your investment.
Value Creation
Uncover opportunities for operational improvement and value enhancement.
Performance Insights
Deep dive into historical performance and future growth potential.
Detailed Reporting
Clear, comprehensive reports with actionable insights and recommendations.
Expert Team
Seasoned professionals with extensive transaction advisory experience.
Client Success Stories
See how our Quality of Earnings analysis has helped clients make informed decisions
"Harbor View Consulting's Quality of Earnings review was quick and efficient. Their report gave me the confidence to move forward with the sale of my company."
CEO, IT Services Company
See a QoE engagement end to end
Read how our buy-side quality of earnings work gave a buyer clarity on adjusted EBITDA and the leverage to close on better terms.
Ready to Protect Your Investment?
Whether you're buying or selling, let's discuss how a Quality of Earnings review can give you confidence in your transaction.