Quality of Earnings Lite Report
Before buying a business, you need to know whether its reported earnings hold up. Our Quality of Earnings (QoE) Lite Report gives SMB buyers a focused financial review to identify questionable addbacks, revenue and expense trends, and other issues that could affect the deal.
Types of Deals We’ve Closed
A Clearer View of the Business’s Financial Performance
We review the business’s financial performance to identify issues that could affect the purchase price, deal terms, or your decision to move forward. Our analysis looks at earnings, revenue, and expense trends, seller addbacks, working capital, and other financial areas that may require closer attention.
You get a focused view of the business’s financial health, along with practical findings you can use as you evaluate the acquisition and prepare for closing.
What We Review
A business’s reported earnings do not always tell the full story. Our Quality of Earnings (QoE) Lite report focuses on the financial areas that can influence valuation, negotiations, and your decision to move forward with an acquisition.
Financial Performance
Reviewing the financial statements for inconsistencies, unusual changes, and other issues that may require clarification before you rely on the reported numbers.
Revenue Trends
Examining revenue performance and changes over time to identify patterns, concentration concerns, and potential risks to future earnings.
Operating Expenses
Reviewing major operating costs, including employee and contractor expenses, to better understand the company’s ongoing cost structure.
Seller Addbacks
Assessing significant addbacks and adjustments to determine whether they appear reasonable and should be considered when evaluating normalized earnings.
Working Capital
Reviewing recent working capital needs to help you understand the amount of capital the business may require to continue operating after closing.
Key Cost Areas
Looking closely at major expense categories and changes in costs that could affect margins, profitability, or the financial assumptions behind the deal.
Tax Returns
If the seller opens a shop across the street, your investment is worthless. We set the non-compete boundaries before the purchase agreement is even drafted.
Earnings Quality
Comparing available tax returns with other financial information to identify inconsistencies or potential red flags that may warrant further review.
Deal-Specific Findings
Highlighting financial issues that may affect the purchase price, deal terms, or areas where you should seek additional information before closing.
Our M&A Team
Every deal is led by attorneys and advisors who have bought, grown, and sold businesses themselves.
Dave Sterrett, Esq.
Founder, Lead Attorney
Dave Sterrett is an entrepreneur-turned-attorney with 20+ years of experience and $100M+ in closed M&A deals. He’s built and sold businesses himself, so he knows what’s at stake on both sides of the table.
Danielle Pezzimenti
Director of Due Diligence
With a background in securities, financial planning, and real estate, Danielle approaches due diligence with the eye of an advisor. She identifies risk and gives buyers the clarity to make confident decisions.
Testimonials
“Working with Sterrett Law during my business acquisition was an absolute game-changer. Dave and his team took care of every detail—from legal due diligence to all the paperwork—so I could stay focused on the big picture. They were super supportive, kept me in the loop at every stage, and were flexible enough to adapt to any last-minute changes. If you’re an entrepreneur looking to buy a business, I can’t recommend them enough. They truly understand the ins and outs of the process and make you feel confident every step of the way.”
Sofia Quintero
“I can’t say enough good things about Dave and his team. Dave was a trusted advisor and confidant in addition to an attorney. He has a knack for getting to the important matters, is conscientious of client needs, and comprehensive. His integrity and demeanor also make him very easy to work with.”
Zain Akbari
“Dave and his team made the buying process as smooth as possible for my first business purchase by going above and beyond what was expected and his rates were the best I found. Definitely give these guys a go for any business acquisitions.”
Phil Stringer
“Wish I could give 6 stars. Dave and his team were incredible partners in my acquisition and went above and beyond the scope of duty. Very experienced, very trustworthy, very responsive, very reasonably priced.”
Ilan Cohen
Frequently Asked Questions
A QoE Lite Report is designed for buyers who want a focused review of a business’s financial performance without the scope of a full Quality of Earnings engagement. It can be especially useful for SMB acquisitions where you want to validate reported earnings, review seller addbacks, and identify financial issues before moving forward.
The documents needed will depend on the business and the transaction. We may review profit and loss statements, balance sheets, tax returns, revenue reports, seller addback schedules, payroll or contractor expenses, and other financial records relevant to the acquisition.
A QoE Lite Report focuses on the financial areas most relevant to evaluating an SMB acquisition. A full Quality of Earnings review typically involves a broader scope and more extensive financial analysis. The right approach depends on the size, complexity, and risk of the transaction.
Yes. If you have questions about seller addbacks, revenue trends, operating expenses, working capital, or another financial area, let us know at the beginning of the engagement. We can determine how those concerns should be addressed within the scope of the review.
Ideally, the review should take place early enough in due diligence for the findings to influence your decisions before closing. Completing the review during the diligence period gives you time to ask follow-up questions, investigate concerns, and consider whether the findings affect the deal.
A financial issue does not necessarily mean you should walk away from the acquisition. Depending on what we find, it may lead to additional diligence, questions for the seller, changes to the purchase price or deal terms, or additional protections in the purchase agreement. Our team can help you understand how the findings fit into the broader transaction.
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Other SMB Services
Buying or selling an SMB is one of the biggest decisions you will make. Legal Dealmakers provides M&A legal services for both buyers and sellers, combining deep transaction experience with firsthand knowledge of what it takes to run and exit a business.