Glossary
7 Questions to Ask Any QoE Provider Before You Hire One
Not all Quality of Earnings providers are the same, and hiring the wrong one costs you twice: once in fees, and again if the analysis does not hold up under the other side’s scrutiny. We run these engagements every week and see how the analysis lands on both the buy side and the sell side, so the questions below are the ones we know separate a provider who does this constantly from one who does it occasionally. Ask them of anyone you are considering, including us.
These seven questions surface that difference.
- How many of these do you do a year?
Volume is pattern recognition. A provider doing dozens of engagements a year knows what a real add-back looks like and what does not survive. You might do one Quality of Earnings in your life; the difference in experience matters on every adjustment.
- Are your adjustments fair or aggressive?
The honest answer is “fair.” A provider who throws in every possible add-back may inflate the number, but those adjustments fall apart under the other side’s diligence and cost credibility at the worst moment. You want adjustments that survive.
- Data book or full report for a deal my size?
A good provider will not default to a fifty-page report on a small deal. For most deals under roughly ten million dollars, an Excel data book delivers the same diligence and is lender-compatible. If they only offer the expensive format, ask why.
- How do you verify an add-back?
Listen for “item by item, traced to the books.” The right answer involves showing the management version next to a verified version with rationale. See EBITDA normalization for what that looks like in practice.
- What is your turnaround?
Speed is a hallmark of a real transaction practice. Slow diligence loses deals. Ask how quickly they can review a teaser and turn the engagement, not just whether they can do it.
- Do you handle tax diligence and valuation, or partner for them?
A QoE is neither. A straight answer about what is in scope, and how tax and valuation are handled through partners, tells you the provider understands the whole deal rather than overselling one piece.
- Do you do both buy-side and sell-side?
A provider who works both sides understands how the other side will read the analysis. That perspective is useful whether you are buying or preparing to sell.
Frequently asked questions
Why does the provider’s deal volume matter?
Because Quality of Earnings work is built on pattern recognition. A provider who sees the same issues repeatedly can tell quickly what is real and what will not survive diligence.
Should I be worried if a provider’s adjustments seem aggressive?
Aggressive add-backs may inflate the headline number, but they tend to fail under the counterparty’s diligence. Fair, defensible adjustments protect the deal.
Why ask about turnaround?
In M&A, slow diligence can cost the deal. A provider’s turnaround tells you whether they are built for transactions or fitting yours between other work.
Where to next
For the full picture of what good diligence looks like, see the Quality of Earnings due diligence guide. To put these questions to our team directly, reach our transaction advisory team.
