If you’re considering buying or selling a business, an independent quality of earnings (QoE) report can give you the information you need to make informed decisions.
With in-depth and customizable QoE reports, Smolin’s experienced team can help business owners and potential buyers better understand a business’s overall health and long-term financial prospects.
Whether you need a deep dive report with all the details or a top-level report to gain initial understanding of where the business is at, we have you covered.
✔️ Identification of historical earnings
✔️ Trend analysis and projections with appropriate adjustments
✔️ Report on potential concerns, including potential balance sheet exposures
(All Core Q of E assessment items plus:)
✔️ SWOT analysis by business function
✔️ Cost-out identification
✔️ Customer/relationship portfolio analysis for sustainability and volatility
✔️ Analysis of systems, process and human capital in comparison with growth expectations
(All Detailed Q of E Report items plus:)
✔️ Assessment of valuation estimates and key assumptions
✔️ Identification of operational bottlenecks and capital requirements
✔️ Team assessment and gap analysis
Unlike audits and reviews, which focus on whether or not financial statements are in line with generally accepted accounting principles (GAAP), a QoE report provides a more in-depth analysis of how sustainable the current financial health of a business is.
Typically, an independent Quality of Earnings Report will:
QoE reports can be an important step in the diligence process because they may expose red flags that are not immediately apparent in reviewing the business’s financial statements.
Among other potential concerns, a QoE report can help identify:
The experienced CPAs at Smolin can help you make more informed M&A decisions—no matter what side of the transaction you’re on.
As part of the due diligence process in considering whether to acquire a company, you’ll want to make sure you have the most accurate possible forecast of the business’s future financial health and long-term profitability.
An independent QoE report is a great way to catch the potential red flags you may miss if you’re only considering the business’s financial statements. If the report does identify significant risks or threats, it may allow you to avoid a purchase you’d come to regret down the road—or help you justify a reduced offer price.
If you’re looking to sell your business, you’ll want to be aware of any complications that may negatively impact your business’s value or cause a potential sale to fall through.
A QoE report can give you a better sense of how your business might look in the eyes of buyers (after all, they may also choose to request a QoE report). In some cases, it may alert you to red flags that you weren’t previously aware of and allow you to make corrections before you attempt to sell your business.
There’s also the possibility that the QoE report will surface positive indicators that aren’t immediately apparent in your firm’s financial statements. In this case, a QoE report may allow your business to justify a higher asking price.
QoE reports don’t fall under the prescriptive guidance of the American Institute of Certified Public Accountants (AICPA). Because of this, the format and scope of QoE reports are quite flexible, and reports can be easily customized to suit your specific situation.
Smolin offers a range of different QoE reporting services to help you create the report that’s best suited to your needs, and we can also adjust the scope of our reports to accommodate your budget.
If you’re considering buying or selling a business, contact us today to see how our QoE reporting team can help you make more informed, reliable decisions.
