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Time Kills All Deals

The Crucial Role of Quality of Earnings Reports in Middle-Market Company M&A


In the dynamic world of business transactions, the adage "time kills all deals" resonates profoundly, especially in the middle-market sector. A key element in expediting a successful sale and mitigating risks is the Quality of Earnings (QoE) report, especially one conducted by a NACVA® (National Association of Certified Valuators and Analysts) Certified business valuation firm. This blog explores the vital role of QoE reports in the sale of middle-market companies.



Understanding Quality of Earnings Reports: A Quality of Earnings report is a comprehensive analysis of a company's financial performance. It goes beyond the basic financial statements to provide a deep dive into the company's earnings quality, sustainability, and the underlying drivers of its profits. This report is crucial for potential buyers to assess the true economic value of a business.


The NACVA® Certification Advantage: Engaging a NACVA® Certified business valuation firm ensures a high standard of accuracy, reliability, and industry-specific expertise in preparing QoE reports. NACVA® professionals are trained to scrutinize financial statements, identify non-recurring or abnormal earnings, and provide a clear picture of normalized earnings.


Speeding Up the Sales Process: In middle-market transactions, time is a critical factor. Lengthy due diligence processes often lead to deal fatigue, increased skepticism, and in some cases, withdrawal of potential buyers. A comprehensive QoE report accelerates the due diligence process by presenting a clear and credible financial picture from the outset, thus adhering to the "time kills all deals" principle.


Mitigating Risks and Enhancing Credibility: QoE reports mitigate risks by uncovering potential financial and operational issues that could derail a deal later. This proactive approach not only saves time but also enhances the credibility of the seller, making the company more attractive to buyers.


Maximizing Company Valuation: A well-prepared QoE report can highlight strengths and opportunities in the business that may not be immediately apparent in standard financial statements. This can lead to a higher valuation, as buyers are willing to pay a premium for companies with transparent, sustainable, and reliable earnings.


Conclusion: In the competitive and fast-paced world of middle-market mergers and acquisitions, a Quality of Earnings report from a NACVA® Certified firm is not just an optional tool; it is a strategic necessity. By embracing this approach, sellers can expedite the sale process, enhance their company's attractiveness, and ultimately realize optimal value from their transaction. Remember, in the world of business sales, time indeed kills all deals, and preparedness is the key to success.


Our NACVA® Certified Partners conduct significant due diligence in performing their QoE Report assignment. Reports generally take 6 weeks to complete after all financial data is received. All Reports are completed by NACVA® Certified analysts who will testify in court or with the IRS to defend their conclusions. Custom price quotes depend on company size and financial complexity.  




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