Quality of Earnings (QoE)
A financial due diligence report prepared by an independent CPA firm during an acquisition. It verifies that the seller's reported earnings are real, recurring, and sustainable — not inflated by one-time events or aggressive accounting. Costs $15K–$50K and is now standard for deals over $2M.
Where This Matters
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Enterprise Value (EV)Seller's Discretionary Earnings (SDE)EBITDA MultipleAdd-BacksDue DiligenceLetter of Intent (LOI)Holdback (Escrow)Earn-OutAsset SaleStock Sale (Equity Sale)GoodwillPersonal GoodwillCommunity PropertySeparate PropertyPereira MethodVan Camp MethodTransmutationBuy-Sell AgreementShotgun Clause (Russian Roulette Clause)Right of First Refusal (ROFR)View all →