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.
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