Quality of Earnings & Diligence Support

Verify, Validate, Value

Trust is built on numbers — and on how confidently you can stand behind them. In today’s market, investors scrutinize financial reporting and company health more than ever. Integrity and transparency are essential to closing a deal, which is ultimately won or lost in due diligence.

When numbers shift or questions go unanswered, deals stall and trust erodes. Our team helps sellers substantiate their financials and gives buyers the insight they need to act decisively. A thorough Quality of Earnings (QoE) report strengthens your acquisition strategy, uncovers opportunities, mitigates risks, and ensures a seamless, investor-ready transaction.

Beyond reporting, we are a trusted partner throughout the transaction process. We provide CPA-led reporting, strategic financial storytelling, and deep transaction expertise — from earnings quality to potential tax benefits — delivering actionable insights every step of the journey.

Financial Due Diligence

Our financial due diligence process includes a thorough Quality of Earnings (QoE) analysis, which goes beyond the numbers to assess key trends, relationships, and the sustainability of earnings. In addition to QoE, we analyze working capital, evaluate the company’s financial forecasts, and provide qualitative and quantitative insights to help make informed decisions. Partner with Berman Hopkins to gain the financial clarity needed to make confident, informed decisions and move forward with your acquisitions with certainty.

What is the Quality of Earnings

Quality of Earnings (QoE) report is crucial to the due diligence process in private equity acquisitions. The report provides a clear view of a company's operations and cash flows by identifying sustainable earnings, trends, working capital needs, forecasting assumptions, key personnel and accounting systems, and other qualitative and quantitative observations.

We Underwent an Audit Last Year. Why Do We Need a QofE Report?

A financial statement audit provides a snapshot of a point in time as to how a company performed financially. However, an audit may not be the sole indicator of the sustainability of company earnings. By examining revenue, expenses, and operational consistency, a QoE report helps private equity groups assess the long-term viability of a target company, reducing the risk of unforeseen financial challenges.

Buyers and sellers are primarily concerned with the valuation of the company. Since valuation is based on a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization), a Quality of Earnings (QoE) report plays a crucial role in assessing the sustainability and quality of a company’s earnings. Differences in valuation opinions can often lead to delays in finalizing a transaction. A QoE report helps bridge this gap by providing an in-depth analysis of earnings sustainability, ensuring the deal progresses smoothly and stays on track.

How Can a Company Benefit from a QofE Report?

Buy-Side Quality of Earnings

We analyze the target company’s financial statements to provide buyers with a clear picture of earnings quality and sustainability. This helps identify potential risks, normalize cash flows, and uncover any hidden liabilities. Our insights enable informed negotiation and confident investment decisions.

Working Capital Analysis & Strategy

We evaluate the company’s working capital to ensure sufficient liquidity and operational efficiency during a transaction. Our PEG (Purchase, Earnings, Growth) strategy aligns financial metrics with deal terms to optimize purchase price and risk allocation. This provides buyers and sellers with a clear framework for value negotiation.

Sell-Side Quality of Earnings

We help sellers present their financials with confidence and credibility. Our Sell-Side Quality of Earnings analysis highlights the company’s earnings power, normalizes results, and identifies adjustments before buyers begin their review. By addressing potential questions upfront and providing a clear, data-driven story, we strengthen the seller’s position, build buyer trust, and support a smoother, faster transaction process.

Diligence Support

We assist throughout the due diligence process by answering financial questions, providing detailed analyses, and clarifying complex statements. Our team ensures transparency and accuracy, reducing deal uncertainty and helping parties move forward confidently. This support safeguards trust and facilitates smoother transactions.

Tax-Efficient Solutions

We offer a full suite of deal advisory services designed to support private equity groups throughout the M&A process. Our services include:

Reviewing LOIs and transaction documents to ensure appropriate tax language
Structuring deals for maximum tax efficiency
Reviewing and analyzing due diligence items, such as tax returns and financial statements, for accuracy and proper reporting
Conducting interviews with the target company to identify tax and financial issues
Providing gain calculations and analysis of the tax consequences of the deal
Assessing tax and financial risks associated with the transaction

Five-Step Approach

We take a structured, risk-focused approach to every Quality of Earnings engagement.

Our five-step process ensures accuracy, efficiency, and insights you can trust.

Pre-Engagement Call

Discuss key objectives, identify target company, and establish expected timelines.

Data Request List

Provide an initial request for documentation to management.

Management Interview

Gain an understanding of key financial and operational areas.

Interim Findings

Review and discuss preliminary observations and adjustments.

Final Report

Deliver report with normalized EBITDA, balance sheet items, and key financial trends.

When We Say Experts,
We Mean Experts.

We have a dedicated team of professionals that has the in-depth experience, knowledge, and skill to bring new ideas and solutions to help you find long-term success. Below is a list of accredited associations our advisory team work with on a regular basis.