Sell-Side QoE / Deal Readiness

Service description

A sell-side quality of earnings review is done for the seller before a business goes to market. An accounting firm normalizes earnings, checks the numbers against records and points out weaknesses in the financial reporting. The business can then show buyers a tested earnings story, so their diligence is less likely to turn up surprises.

Common industries

Applies to owner-led and investor-backed businesses in any industry preparing to sell.

ROI

A ready, credible financial story protects valuation and speeds a deal; getting ahead of buyer diligence avoids last-minute price erosion.

Benefit

Prepare your financials for sale — a sell-side quality-of-earnings and clean-up so buyers' diligence goes smoothly and defensibly.

Why get it

Buyers will test the seller's numbers and may cut the price when they find problems late. Finding and explaining the issues first keeps the seller in control of the story.

When you benefit

Usually done once, ahead of going to market, then updated if the sale process runs long.

What it costs

Typically a project fee.

When you pay

Usually a fixed project fee, scaled to the size of the business, the periods reviewed and the state of its books. Updates for later periods and help answering buyer questions are often billed hourly.

Other costs

Accounting clean-up if records need work, legal and tax advice, and management time to support the review.

Risks to know

A review can surface problems the seller would rather not see, and the seller must then decide how to handle them with buyers. A report that overstates earnings can lose credibility, because buyers usually test it with their own advisors. Fixes that take too long can delay a sale.

When risks arise

Issues are best found before the business goes to market. If they surface during a buyer's diligence instead, they can lead to a lower price or a delayed closing.

The process

The provider reviews the books and normalizes earnings for one-time or owner-related items. It tests revenue, margins, cash flow and working capital against support, and flags weaknesses to fix. The business reviews the findings and receives a report to share with buyers.

Your commitment

The owner shares financial statements, tax returns, general ledger detail and key contracts, and makes the finance team available. The business should decide in advance which adjustments it is prepared to explain and support.

Documents to gather

• Financial statements and tax returns for recent years
• Monthly financial statements and a trial balance
• List of owner expenses and one-time items
• Customer, vendor and payroll summaries

Helpful reading

• 5 steps to a successful sale — Journal of Accountancy
• Close or sell your business — U.S. Small Business Administration
• What High-Quality Revenue Looks Like — Harvard Business Review