Quality of Earnings - Details

by a searcher from The University of Chicago - Booth School of Business

9 months ago

Hi there,

What do we need to know when it comes to QOE?

Few things that come to mind:
- what are the firms doing this
- what is exactly involved? What is NOT involved (are they doing any other  components of due diligence)
- ho long it takes and what is the output
- what hat is the cost

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lender from Clemson University

Luke thanks for the tag. Calin the QofE provides you a normalization of the cash flow and provides the best guess add backs to see what the company is actually producing in terms of bottom line. I work with a number of firms but it really depends on the industry that the company sits in. Feel free to email me at --@----.com

8 months ago | like reply | 0 likes

searcher

Calin - QoE costs are going to be dependend on the deal, but for smaller deals (less than $10MM in TEV), you can expect to pay $20-$30K. The scope should include end-to-end financial diligence (proof of cash, recast PF financial statements, proof of addbacks/adjustments, etc.), but won't generally include any other types of diligence (benefits, tech, HR, legal, etc.). QoE is usually done in two phases. The length of time it takes will depend on seller cooperation and engagement but Phase I should take ~30 days and Phase II will be another ~20-30 days. You should get a final QoE report roughly a month before closing. Hope this helps.

8 months ago | like reply | 1 like

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