08/18/2026
Would your company’s earnings hold up under a buyer’s microscope?
If you’re preparing to sell your business, you may hear the term “Quality of Earnings,” or QoE, during the process.
A QoE takes a deeper look at the earnings behind your financial statements. It helps validate how consistent and reliable those earnings really are and identifies adjustments or accounting complexities that could affect how a buyer views your business.
Does that mean every seller should get a QoE?
No.
If your financials are straightforward, consistent, and well understood, the additional cost may not make sense.
If there are timing differences, unusual adjustments, complex revenue streams, or other areas that could raise questions during due diligence, a QoE may be worth the investment.
Because a QoE isn’t only about avoiding surprises.
It could impact the value of your business.
In the right situation, a seller-side QoE may identify or validate adjustments that support stronger normalized earnings. And when a buyer applies a multiple to those earnings, even a relatively small adjustment could have a much greater impact on your sale price.
The type of buyer matters, too. Private equity firms and some strategic buyers may conduct more extensive financial diligence, including their own QoE.
That creates a strategic decision for the seller: Do you wait for the buyer to conduct the analysis, or does it make sense to identify potential questions and adjustments before going to market?
So the question isn’t:
“Do I need a Quality of Earnings analysis?”
It’s:
“What will a buyer want to validate about our earnings, and can we support those numbers with confidence?”
Because when it’s time to sell, buyers won’t just look at your earnings.
They’ll want to understand how sustainable, repeatable, and defensible those earnings really are.
The earlier you understand what a buyer will scrutinize, the more time you have to address potential issues and strengthen the value of your business.
The right approach will depend on your business, your financials, and your goals. But understanding what a buyer will want to validate is always a good place to start.
