by a searcher
from Northwestern University - Kellogg School of Management
in San Ramon, CA, USA
1yr ago
QOE
What’s reasonable to spend on QoE for a deal that’s $1.5M with mid $300K SDE? And if you have any good resources, please free to DM and share. Truly appreciate your assistance.
Regards
Vish
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by a searcher
3mos ago
from Andrews University
in Apex, NC, USA
@redacted I built a tool as well for this use case. Im usually doing all the analysis for my team so built this to help. Try it out and give feedback. First is free so would love your thoughts, good or bad.
Deallens-app.streamlit.app
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by a professional
3d ago
from Harvard University
in Atlanta, GA, USA
A year late, but the question keeps coming up. On a $1.5 million deal with mid-$300K SDE, a full QoE at $15,000 to $25,000 is more than the deal can carry; a pre-LOI screen in the $3,000 to $5,000 range, or a scoped QoE under $10,000, is the right size. Two things frame the spend.
First, at that price the lender will not require a QoE (the new SOP threshold is a $3 million business purchase price), so the report is for you, not the bank. That changes what you buy: you want the tests that move the number, not the sixty-page format.
Second, the four tests worth paying for on a $300K SDE business, in order: bank deposits reconciled to reported revenue for the trailing twelve months (if that is off by more than a few percent, everything else is moot); every add-back checked against the bank payees for recurrence; owner compensation priced at what it costs to replace the owner, because SDE assumes you work for free; and the top-ten customer list with revenue. A competent provider can do those four in a week for a few thousand dollars, and you can do the last one yourself with the customer schedule.
What I would not pay for at this size: a valuation opinion (the lender orders its own), projections, or a report longer than you will read.