Glossary
What Drives the Cost of a Quality of Earnings Report
There is no list price for a Quality of Earnings report, and any provider who quotes one before seeing the deal is guessing. The cost tracks the work, and the work tracks how big the deal is, how clean the books are, and what you actually need delivered. Understanding the drivers below tells you whether a quote is fair and where you can keep the number down.
- The deliverable you need
The biggest single driver is whether you need a data book or a full written report. For most deals under roughly ten million dollars, an Excel data book carries the same diligence and is lender-compatible, at a lower cost than a long report. A fifty-page report is built for larger, private-equity, or complex-capital-structure deals. Paying for the report format on a small deal is paying for packaging, not protection.
- The size and complexity of the deal
A single-entity business with one location and one revenue stream is far less work than a multi-entity group with several locations, intercompany activity, or cross-border operations. Complexity, not just revenue, is what moves the effort.
- The state of the books
Clean, reconciled books on a well-kept accounting system are quick to work through. Messy books take longer at every step: more time to reconcile, more add-backs to chase, more questions to resolve. The condition of the financial records is one of the most common reasons one deal costs more than another of the same size.
- The volume and traceability of add-backs
A long list of add-backs, especially ones that are hard to trace to the general ledger, adds work because each has to be verified item by item. A short, well-documented list is faster to stand behind.
- Industry-specific complexity
Some industries carry diligence that simply takes more work. Construction and trades bring percentage-of-completion revenue, retainage, and work-in-progress schedules. Inventory-heavy businesses bring valuation and cutoff testing. Subscription or membership businesses bring deferred revenue. The more of this a deal has, the more the analysis involves.
- Buy-side versus sell-side scope
A sell-side engagement often includes preparing the business to be diligenced by buyers, which can be broader than a buy-side review of a single target. The scope you need shapes the cost.
- Turnaround
Speed is a real input. A standard timeline is one thing; compressing the same work into a few days to hold a deal together is another. Urgency can affect what an engagement takes.
How Treewalk approaches the fee
We quote a fixed fee agreed up front, not an open hourly meter, so the cost is known before the work starts and does not balloon if the deal drags or the books turn out messier than expected. The drivers above are what we look at to set that fee, which is why we ask about deal size, the state of the records, and the deliverable you need before we quote.
What you can do to keep the cost down
The biggest lever is in your control: the cleaner and better-organized the financial records and the data room, the less time the analysis takes. Reconciled books, a tidy add-back schedule with support, and prompt answers to questions all reduce the work, and therefore the cost.
Frequently asked questions
How much does a Quality of Earnings report cost?
There is no flat price. The cost depends on the deliverable you need, the size and complexity of the deal, the condition of the books, and the turnaround. A clean, single-entity deal handled as a data book is the lower end of the effort; a complex multi-entity deal delivered as a full report is the higher end. Ask any provider what drives their quote, and be cautious of one that names a number before seeing the deal.
Is a data book cheaper than a full report?
Generally yes, because the report format adds presentation, not diligence. For most deals under roughly ten million dollars the data book delivers the same analysis at lower cost and is accepted by lenders.
Do messy books make a QoE more expensive?
Yes. Poorly kept records take more time to reconcile and verify at every step, which is one of the most common reasons two similar-sized deals cost different amounts.
Is the fee fixed or hourly?
At Treewalk it is a fixed fee agreed before the work begins, so it will not balloon if the deal drags or the books are messier than expected.
Where to next
For what the analysis actually delivers, see the Quality of Earnings report entry and the full Quality of Earnings due diligence guide. To get a fixed-fee quote scoped to your deal, contact our transaction advisory team.
