If you're reading this because a buyer's team just told you they're commissioning a Quality of Earnings (QoE) review, you're already past the point of "should I worry about this." The honest answer is: it depends entirely on how prepared your financials are — and you're about to find out, whether you're ready or not.
This is the moment that decides whether your deal closes at the price you agreed to, or gets renegotiated in the final weeks. Here's what's actually about to happen, and what you can still do about it.
What the buyer's QoE team is actually going to do
A buyer-side QoE engagement takes your historical financials — usually two to three years — and rebuilds them into a normalized picture centered on adjusted EBITDA. They're not auditing whether your numbers are accurate in an accounting sense; they're testing whether the earnings you're asking them to pay a multiple on are real, recurring, and will actually continue after you're gone. Every addback you've claimed, every "one-time" expense, every assumption about why last year was an outlier — all of it gets tested against documentation, not just your word.
What typically goes wrong from the seller's side
Three patterns show up constantly in buy-side QoE work:
Undocumented addbacks get removed, and removed addbacks come straight out of price. If you've told your broker or your buyer that $200,000 of expenses were "personal" or "one-time" but you can't produce the paper trail — invoices, board minutes, a clear explanation — the buyer's team will often disallow it. At a 4x multiple, an unsupported $200,000 addback is $800,000 off the table, not $200,000.
Working capital assumptions become a fight, not a formality. Most purchase agreements include a working capital adjustment mechanism. If you don't have a clear, defensible view of your normalized working capital going in, this becomes one of the most common sources of post-close disputes and price erosion — often discovered only after the QoE team starts digging.
One bad finding makes everything else suspect. This is the part sellers underestimate most. The moment a diligence team finds one number that doesn't tie out cleanly, they stop taking the rest of your financials at face value. Even accurate, well-documented figures start getting re-verified from scratch. Trust, once lost mid-deal, is expensive to rebuild — in both time and price.
What you can still do, even mid-process
If the buyer's QoE has already started, you have less room than you would have had a year out — but you're not out of options.
Get your own read before their findings land on your desk as a surprise. A fast, independent look at your numbers — even a short-form review rather than a full sell-side QoE — tells you what the buyer's team is likely to find before they tell you, so you can prepare your explanation instead of scrambling to produce one under deadline pressure.
Pull together documentation now, proactively, rather than waiting to be asked. Addback support, related-party transaction details, an explanation for any unusual revenue or margin swings — assembling this before the buyer's team specifically requests it (rather than after) signals competence and can meaningfully shorten the back-and-forth.
Don't guess at what "normalized EBITDA" should include. Owners sometimes push back on a buyer's QoE findings with instinct rather than analysis — "that's not fair" isn't a counter-argument a sophisticated buyer's team will engage with. A credible independent view, with its own documentation, is what actually moves a disputed number back in your favor.
If you have any time before the QoE process fully concludes
Even two to three weeks is enough time to fix the most common, cheapest problems: assembling addback documentation, clarifying a related-party arrangement, or getting ahead of a working capital question before it's raised formally. The constraint isn't time to analyze — it's time to react instead of prepare, which is a materially worse negotiating position.
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