Quality of Earnings:
About Quality of Earnings
- Complete Forensic Accounting
- CPA Certified
- See Agreement
- Sell Side QoE: CPA-Certified, $7900
- Buy Side QoE: CPA-Certified, $7900
- Valuations Based on The QoE: $2900
Deliverables:
Business Brokers MAKE MORE MONEY because more of their listings are sellable
Buyers are PROTECTED because the financials are verified, or problems are exposed.
Lenders FEEL SAFER because their underwriting is based on truthful representation.
Trust, but verify
Maximize Exit Value provides high-level, thoroughly researched Quality of Earnings Reports that PROTECT buyers, brokers, and bankers.
- Bank-deposit reconciliation,
- Financial Quality Review,
- EBITDA/SDE verification,
- Add-back verification,
- Revenue concentration,
- Working-capital analysis,
- Tax-return-to-P&L reconciliation,
- DSCR analysis.
- Red-flag report.
- Questions buyer should ask seller.
- Expose any anomalies and recommend points of caution so the buyer can enter the purchase with confidence.
Case Studies:
Case Study 01
Overview:
Client engaged MEV to support his acquisition of a leading regional provider of trailers and heavy equipment. The business had strong historical revenues but a complex inventory and cash management structure.
Our Approach:
- Inventory Deep Dive: We conducted a detailed trend and turnover analysis on hundreds of SKUs, uncovering slow-moving and obsolete inventory not previously disclosed.
- Cash Flow Sensitivity: Built models showing how inventory mismanagement could disrupt cash flow, potentially impacting supplier payment terms and customer lead times by synthesizing thousands of pages of bank statements.
- Vendor & Supplier Stability: We interviewed seller, the accountant, and other personnel to ensure the transition would not trigger pricing or delivery changes with key suppliers.
- Purchase Price Adjustment: Identified a 10% softening in “run-rate sales” over the trailing six months, leading to a successful renegotiation of the purchase price down over six figures.
Result:
Acquired the business with a stronger balance sheet position, post-close working capital protections, a lower purchase price than originally agreed upon and preserved supplier relationships critical to ongoing operations.
Case Study 02
Overview:
Client sought to acquire three entertainment venues: two axe-throwing bars and one escape room, each previously run by various owners, with inconsistent operations and financial reporting.
Our Approach:
- Ownership Transition Mapping: Created a full timeline of prior ownerships, uncovering hidden liabilities including a guarantee not documented in the original sales agreement.
- Revenue Quality Analysis: Normalized revenues through a deep dive into customer booking systems and point-of-sale reports, detecting a overstatement in reported sales due to unrecorded gift card redemptions.
- Operational Integration Risk: Modeled labor and marketing overlaps to show post-close synergy opportunities and risks, informing the buyer’s staffing and expense decisions.
- Purchase Price Adjustment: Leveraged findings to negotiate a significant reduction in the combined purchase price and secured indemnities for prior owner liabilities.
Result:
Case Study 03
Overview:
Client partnered with MEV to acquire a major supplier of furniture to builders and contractors, with a complex structure of accounts receivable tied to general contractor (GC) payment cycles.
Our Approach:
- Receivables Risk Assessment: Analyzed AR aging reports, cross-referenced with GC contract statuses, uncovering ~$200K in receivables at high risk of non-collection.
- Funds Flow Mapping: Modeled complete fund flow, starting with bidding for a project all the way to invoicing to GC draw schedules to subcontractor payments, ensuring a clear picture of cash timing and risks.
- Lender Communications: Built lender-ready cash flow projections, including stress-tested scenarios based on delayed GC payments, helping secure acquisition financing approval at a favorable interest rate.
- Purchase Price Negotiations: Armed with data that led to a material reduction in purchase price and renegotiated holdbacks contingent on receivables collections.
Result:
Result: Successfully closed on terms that protected against cash flow shocks, preserved lender confidence, and positioned the business for stable post-close liquidity.
Our Process
Obtain from seller most recent three years of tax returns (2023, 2024, 2025) plus the most recent Balance Sheet. It is also necessary to gain limited access to the seller’s accounting system in order to systematically analyze ledger entries.
Analyze Business Tax Returns, Financial Statements and Ledger to generate Preliminary Report.
Deepen analysis by matching bank statements with ledger entries to ensure there are no inflated revenues or hidden expenses, and to uncover intermingling between personal and business accounts.
Prepare a summary of recommendations that the client can initiate for a safer transaction. Prepare a summary of questions that arose from the in-depth research into the Co. MEV can also be retained to speak on the client’s behalf with the seller or buyer.
Invest in Certainty
“Our goal is to serve 1000s of business owners, and to create a profitable ecosystem for those like-minded professionals who are committed to the success of business owners.” Frank Turner, Founder & President