How often does QoE materially change the EBITDA/SDE story for searchers?

 profile

April 29, 2026

by a searcher from University of Central Florida in Caldwell, ID, USA

Curious to hear from searchers and operators who've been through QoE on small business acquisitions. Trying to calibrate my expectations before going deeper on a deal. Specifically: In your experience, how often does QoE produce material changes to the seller-stated EBITDA or SDE? Material meaning enough to change the deal economics or your willingness to close at the LOI price. When adjustments happen, what's the typical magnitude? 5%? 15%? 30%+? What categories of issues tend to surface most often? My guess would be aggressive owner addbacks, personal expenses run through the business that aren't really discretionary, revenue recognition timing on project-based work, working capital normalization, and customer concentration that wasn't disclosed upfront. Curious what actually shows up vs what I'm imagining. For those who've used both small specialized providers (Appletree, Aquila, etc.) and larger firms, did you find the smaller firms catch what matters at this size? Or do larger providers find things the smaller ones miss? Any patterns specific to trades businesses, B2B services, or owner-operator businesses with $400K-$1M SDE that I should be especially focused on? For context: I'm a self-funded searcher in Idaho looking at trades and trade-adjacent B2B businesses. Have one deal with reviewed financials from a real CPA firm where I'd expect QoE to mostly confirm the numbers, and another where the financials are CIM-only and I'm bracing for more surprises. Appreciate any war stories or general patterns. Trying to get realistic about what I should expect to find vs what's actually rare.
4
28
611
Replies
28
commentor profile
Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
Really great comments above. I’ll add that most (all) of my borrowing clients are happy they obtained a QOE. Helps not only with EBITDA confirmation but also with working cap analysis which you can’t put a price on. And even in those rare cases when big adjustments don’t result, the peace of mind knowing you’ve confirmed also makes it worth the extra effort and due diligence investment. redacted
commentor profile
Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA
Few hot topics: 1) SDE vs FCF, 2) acceptable add-backs/adjustments, 3) accrual vs cash basis, 4) fast growth and fast contraction deep dives, 5) Capex - deferred, growth vs maintenance, 6) WC deep-dives esp with long conversion cycles, 7) contracts esp concentration and/or govt pay and 8) non-recurring events. Really industry, business dependent but just a few topics off top of my head.
commentor profile
+26 more replies.
Join the discussion