Services / Sell-Side Quality of Earnings
Sell-Side Quality of Earnings (QoE) Reports
A sell-side Quality of Earnings report that presents your company's adjusted earnings credibly to buyers before they run their own diligence.
What Sell-Side Quality of Earnings is
A sell-side Quality of Earnings report is commissioned by the seller before going to market. It establishes adjusted EBITDA with the evidence behind each adjustment, so the number in the marketing materials is one the seller can defend when a buyer's team tests it. Adjustments that are identified, documented and explained in advance are negotiated on the seller's terms; adjustments a buyer discovers late are negotiated on the buyer's.
It also surfaces problems while there is still time to fix or explain them: unreconciled accounts, revenue recorded in the wrong period, customer concentration, working capital that swings with the season. A seller who knows these before the buyer does keeps control of the timeline.
What the engagement covers
- Adjusted EBITDA
- A documented bridge from reported to adjusted earnings, with support for each addback a buyer is likely to challenge.
- Net working capital
- Monthly working capital over the analysis period and the basis for a defensible peg. Full scope.
- Proof of cash
- Reconciliation of ledger cash activity to bank statements for the periods covered. Full scope.
- Revenue quality
- Customer concentration and revenue trends where revenue by customer is available.
- Buyer readiness
- The questions a buyer's diligence team will ask, identified and answered before the process starts.
Scope options
Full
A full sell-side report covering adjusted earnings, working capital and proof of cash.
Lite
A streamlined engagement that gets your adjusted numbers buyer-ready within the agreed scope.
Who it is for
Business owners preparing for a sale or recapitalization, and the bankers and brokers who represent them.
How an engagement works
- 01
Scope
Choose the service and confirm the scope and CPA sign-off for your engagement at intake.
- 02
Share the evidence
Provide the financial statements, ledger detail and deal documents the engagement needs through a secure workspace.
- 03
Analysis
The work runs on Finsider's diligence software, which traces reported figures back to source records.
- 04
Reviewed deliverable
You receive a deliverable that has been through professional review, with the evidence behind its findings.
What we need from you
Required to start
- Legal business nameExact name as registered with the state and IRS.
- Entity typeDrives filing forms and tax treatment.
- EINFederal Employer Identification Number.
- State of formation
- P&L: last 3 fiscal years + YTDMonthly detail preferred.
- Balance sheets: last 3 fiscal years + YTD
- Monthly trial balances: analysis periodMonthly TBs for the full QoE analysis period.
- GL detail exportTransaction-level general ledger for the analysis period.
- Deal timeline / expected close date
Helpful if available
- States with activity / nexusEvery state with employees, property, or significant sales.
- Fiscal year end
- Cash flow statements: last 3 fiscal years + YTDIf not produced, we can derive from the GL.
- Trial balance / GL exportFull general ledger export covering the same periods.
- Revenue by customer by monthNeeded for concentration and revenue-quality analysis.
- Proposed addbacks / adjustmentsKnown one-time items, owner expenses, out-of-period entries.
- LOISigned or draft letter of intent, if available.
- Data-room access notesPlatform and how we'll be granted access.
- Management contacts for interviewsNames, roles, and emails for finance/ops interviews.
- Reason for saleContext helps us frame adjustments for buyers.
- Banker / broker engaged
Questions
Why would a seller pay for diligence on their own company?
Because the buyer will do it regardless. A sell-side report lets the seller set the adjusted earnings figure with evidence, find issues before they become price reductions, and shorten the buyer's diligence.
Will a buyer rely on a sell-side report?
Buyers usually perform their own diligence, often using the sell-side report as a starting point. Its value is in the quality of the support behind each number, which is what a buyer's team will test.
What do you need from us?
Profit and loss statements and balance sheets for the last three fiscal years plus the year to date, monthly trial balances and transaction-level general ledger detail for the analysis period, and the expected timeline. Revenue by customer by month, your proposed adjustments, the reason for sale and your banker or broker's details help frame the work.