Quality of Earnings (QofE)

Service Page

QofE Hero Section

  • TRANSACTION ADVISORY & DUE DILIGENCE

  • Uncover the True Earnings Power Behind Every Deal.

  • Rigorous buy-side and sell-side Quality of Earnings analysis engineered for middle-market transactions, private equity buyers, and business founders.

  • Request a QofE Scoping Call

  • Download Sample Executive Summary Outline

Overview

Audited or reviewed financial statements confirm accounting mechanics—they do not evaluate future cash flow or sustainable earnings power.

Audexa’s Quality of Earnings (QofE) report dives deep beneath the surface of tax returns and balance sheets. We analyze revenue quality, normalize EBITDA, evaluate customer concentration, and establish accurate working capital targets—giving buyers and sellers total clarity before closing.

Beyond the Audit

Who We Serve

Buy-Side Due Diligence

De-risk your transaction before committing capital. We validate target earnings, audit customer retention, analyze gross margins, and identify post-acquisition operational integration risks.

  • Validate normalized EBITDA and identify non-recurring expenses

  • Evaluate revenue concentration and customer churn trends

  • Assess working capital requirements to negotiate fair purchase price adjustments

For Private Equity, Search Funds & Strategic Buyers

Maximize valuation and eliminate deal friction before entering the market. A sell-side QofE allows you to uncover red flags early, defend your valuation, and streamline buyer due diligence.

Sell-Side Readiness & Pre-Sale Due Diligence

For Founders & Business Owners Preparing to Exit

  • Establish a defensible, audited-grade EBITDA bridge

  • Prevent buyer price re-chips and lengthy diligence delays

  • Present buyers with a clean, institutional data room and financial presentation

What Our QofE Report Delivers

  • Detailed adjustments for owner compensation, non-recurring expenses, out-of-period revenue, and personal/discretionary add-backs.

  • Deep breakdown of revenue by product, customer, contract type, and geography to identify churn risk and margin erosion.

  • Historical working capital analysis to establish an accurate, fair working capital target for deal closing.

  • Reconciliation of balance sheet accounts and verification that reported revenue matches cash inflows.

  • Detailed run-rate analysis to understand ongoing fixed vs. variable cost structures under new ownership.

QofE Engagement Process

[1] Scope & Data Collection

Secure data room setup & initial document intake

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[2] Deep-Dive Analysis

Financial normalization & trend analysis

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[3] Management Interviews

Validation of assumptions & operational drivers

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[4] Report & Deal Guidance

Comprehensive QofE report & executive debrief session

QofE Conversion & Consultation Section

  • Planning an Acquisition or Preparing for an Exit?

  • Connect directly with our transaction team for a confidential scoping discussion and custom proposal tailored to your deal timeline.

    • Full Name

    • Firm / Company Name

    • Transaction Role (Buy-Side / Sell-Side / Search Fund / Founder)

    • Target Deal Size / Revenue Range

    • Estimated Closing Timelin