Sell-side diligence · Sell-side QoE

Sell-side diligence, done before a buyer's team starts.

Every number in your business will be read by a buyer's diligence team. Read them first, on your side of the table. We help owners reconcile the books to source, document the support behind adjusted earnings, and build the data room and the diligence file before a letter of intent gives the buyer exclusivity.

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Built for a sale of all or part of the company, a recapitalization, a strategic investment or a refinancing with institutional capital.

The buyer-ready earnings bridge

Reported results

Begin with the P&L, the balance sheet, the general ledger and the source systems.

Reconcile and normalize

Fix entries booked in the wrong period or category, missing accruals and intercompany differences.

Document adjustments

Each add-back and pro forma item is backed by a document a buyer can check.

Defensible, buyer-ready adjusted earnings

Adjusted earningsRevenue qualityWorking capitalDebt-like itemsData roomBuyer Q&A support

Why it matters

Diligence is where an owner's leverage is kept or lost.

Your numbers will be read with or without preparation. The question is who finds the issues first, and where: sized and explained on your side of the table, or surfaced after the letter of intent, when the buyer holds exclusivity and each open item can reopen the price, the structure, the working capital target, the escrow, the earnout or the closing date.

Find the problems first

The issues a buyer would use against the price, found while you can fix them.Turn over

What gets found

Revenue booked unevenly, month-end closes that vary, one-time costs hidden in operations, add-backs with no support and intercompany balances are found and explained before a buyer can use them to tell the story.

Defend your adjusted earnings

Adjusted earnings a buyer's accountants can check line by line.Turn over

How the number holds

Buyers pay for earnings they can trace. The bridge runs from reported results to adjusted earnings, and every material adjustment is tied to a document.

Shorten diligence

Answers ready before the requests arrive, so fewer weeks pass under exclusivity.Turn over

Why it moves faster

With schedules, documents and answers organized in advance, the deal team responds faster, repeats fewer requests and keeps momentum toward closing.

Build buyer confidence

A business that reads as run by a system, not by its founder.Turn over

What a buyer sees

Consistent reporting and documented support show a business that is run professionally and can change hands, with its risks stated plainly rather than hidden.

What you receive

What we build.

Sell-Side Quality of Earnings and institutional-grade books

Reported results reconciled to adjusted earnings, with accounting applied the same way each period, figures tied to source data and schedules that hold up under a buyer's review.

About the Sell-Side QoE

Complete virtual data room

An indexed room with controlled access, arranged around the requests buyers and lenders actually send: financial, legal, tax, people, operations, compliance and customers.

About the data room

Buyer-ready due-diligence file

The request tracker, the risk log, the written answers and the evidence behind them, cross-referenced and reviewed before the first buyer request arrives.

About diligence preparation

Documentation, SOPs and management reporting

Written policies, workflows, roles and KPI reporting that show the business runs without the owner and can pass to a new owner.

About documentation and SOPs

Sell-side Quality of Earnings

Know the earnings a buyer can underwrite.

A sell-side Quality of Earnings report is financial diligence done for the seller, before a buyer does its own. It asks whether reported earnings are accurate, what they are made of, whether they will recur and how much of them turns into cash, and it reconciles reported results to adjusted earnings. It is analysis with support behind every adjustment, not a list of add-backs the owner hopes a buyer will accept.

What a sell-side QoE does for the owner

It shows the owner and the deal team the issues a private equity buyer, a strategic acquirer or a lender will raise, while there is still time to act. The owner then decides what to fix, what to document, what to disclose and how to tell the financial story before the business goes to market.

The work ties the financial statements back to the general ledger, the trial balance, bank statements, payroll, tax filings, customer and payer detail, operating systems and the contracts that matter. Any adjustment that moves value has its document in place before a buyer asks.

Sell-side QoE and ordinary bookkeeping

Bookkeeping keeps the record. A sell-side QoE reads that record as a buyer will. Does revenue repeat? Do margins hold? Does an expense really end at closing? Is there enough working capital? Which liabilities count as debt? Can a new owner earn the same result?

Sell-side QoE and buy-side QoE

The seller's report sets an open, documented starting point. The buyer's report is paid for by the buyer, to support its case and to find what could go wrong. Buyers and lenders may still commission their own work, and a prepared seller meets it with reconciled schedules, written positions and an organized way to answer, rather than a blank page.

Nothing here is about hiding weaknesses. Each one is found, sized, explained and, where it can be, fixed before it becomes a lever in the buyer's hands.

What the analysis covers

Source-data reconciliation

Every reported figure tied back to the system it came from.Turn over

Ledger to bank to tax return

Financial statements tied to the trial balance, general ledger, tax returns, bank and payroll records, card processing, billing and practice systems, ERP, CRM and any other system that holds material data.

Adjusted earnings bridge

One path from reported results to adjusted earnings, each step explained.Turn over

Every step from reported to adjusted

Reported net income bridged to adjusted earnings, item by item: accounting corrections, timing, classification, one-time and nonoperating items, and pro forma changes.

Add-back support

The add-backs a buyer will accept, separated from the ones it will not.Turn over

Amount, recurrence and transfer

Each proposed add-back, from owner pay and personal expenses to one-time professional or legal fees, discontinued lines and related-party items, checked for amount, whether it recurs and whether it carries over to a new owner.

Revenue quality

How much of the revenue will still be there after closing.Turn over

Recurring, organic and lasting

Recurring against one-time revenue, organic against acquired growth, price and volume, churn, backlog, reimbursement and collections, cancellations, credits and refunds, and whether the recent trend will last.

Concentration and mix

Where revenue and margin come from, and how exposed they are.Turn over

By customer, payer and service line

Revenue and margin broken out by customer, payer, provider, site, product, service line, contract, region or channel, with concentration and renewal exposure.

Gross margin and cost structure

Which costs a buyer inherits, and which end at closing.Turn over

Fixed, variable and inherited

Cost of goods sold, labor and provider pay, purchasing, rent, commissions and overhead, how margins have moved, which costs are fixed or variable, and which expenses a buyer will inherit.

Net working capital

The working capital you deliver at closing, argued from your numbers.Turn over

Method first, then the number

Analyze monthly working capital, seasonality and unusual balances, set out the method, and build support for a normalized level before a buyer proposes a peg.

Balance sheet and debt-like items

The items that come off the price at closing, found first.Turn over

Everything that reduces proceeds

Cash, debt, accruals, taxes owed, deal bonuses, deferred pay, leases, related-party balances, old payables, customer deposits and anything else that can reduce what the owner takes home at closing.

Cash flow and capital expenditures

How much of the earnings actually turns into cash.Turn over

Earnings against cash

Earnings set against the cash the business actually produces, recurring and postponed capital needs, maintenance CapEx separated from growth CapEx, and the reasons earnings and cash differ.

Trends, seasonality and run rate

Whether today's run rate holds, and what is behind it.Turn over

What sits behind the run rate

Month-by-month history and trailing-twelve-month results, with the acquisitions, openings, closures, lost and new customers, contracts and staffing changes behind today's run rate.

Forecasts and sensitivities

Whether the forecast holds under a buyer's harder assumptions.Turn over

Realistic cases, not one plan

The bridge from past results to the budget or forecast, and how value and borrowing capacity move under realistic revenue, margin, staffing and working-capital cases.

Risk flags and remediation

Every weak point sized, with its answer ready, before negotiation starts.Turn over

One list, used every time

A ranked list of the issues a buyer will likely raise, the evidence each one needs, who owns it, what to fix and the answer to give, written once and used every time.

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What it is not

A sell-side QoE is not:

An audit, review, compilation, valuation or assurance opinion. Each of those is a separate engagement.
A promise that a buyer will accept each adjustment.
A replacement for legal, tax, regulatory or compliance diligence.
A substitute for a lender's report. An SBA-required quality of earnings must be commissioned by the lender, and the rule provides that it may not be prepared by or for the borrower or the seller. Nothing here substitutes for it.
A way to create earnings the business does not have.
A single report left behind, with no schedules and no help when buyers ask questions.

Institutional-grade financial books

From an owner's books to a reporting system any buyer can follow.

Institutional-grade does not mean complicated. Every material number can be traced, is kept the same way each period, can be explained and can be produced again. A buyer can see how the books are made, what supports each key account and how management reads the business each month.

Traceable

Every material figure ties to a source system, a document or a reconciliation.

Consistent

The same accounting policies and account mapping are used in every period.

Explainable

Management can explain what moves revenue, margin, working capital and cash.

Repeatable

The month-end close, the reports and the KPIs run on a written process, not on one person.

Area	Common founder-managed condition	Institutional condition
Monthly close	Books are cleaned up once a year, or when taxes are due.	A close calendar, named account owners, reconciliations and review every month.
Chart of accounts	Accounts have grown by habit and change from year to year.	A stable chart, mapped across periods so results compare.
Revenue recognition	Revenue is booked when the cash arrives.	Revenue is recorded when earned, under a written policy applied the same way each period.
Add-backs	Adjustments are listed from memory, close to the sale.	Each adjustment has a document, an amount and a reason it will not recur.
Segment reporting	Results cannot be shown by location, customer, product or service line.	Consistent reporting by the segments that drive value, concentration and margin.
Management reporting	Decisions rest on the bank balance or last year's tax return.	A monthly package: P&L, balance sheet, cash flow, working capital, KPIs and budget against actual.

What the work includes

Rebuilding the chart of accounts and remapping past periods so each year can be compared with the next.
Tying P&Ls and balance sheets to tax returns, bank and payroll records, card processing, billing and practice systems, ERP, inventory and CRM data.
Restating material cash-basis or tax-basis activity on an accrual basis where a transaction needs it.
Pulling nonoperating, related-party, personal, one-time and deal-specific items apart from the operating results.
Writing the month-end close steps, the reconciliation standard for each account, the approval flow and who owns each report.
Reporting by segment, with KPI definitions anyone can rebuild from the same data.
Budgets, forecasts, bridges and variance notes built on assumptions that are written down.

The standard we work toward

A buyer can follow any material figure from the statements back to its records.
Monthly results compare, and significant swings can be explained.
Adjustments are supported, categorized and calculated the same way each time.
Working capital and debt-like items are known before the price is negotiated.
Reporting keeps running after the owner steps back.

Request a Confidential Preparation Review

Complete virtual data room

A data room is evidence, organized.

A virtual data room (VDR) is the secure online room where a buyer, its lenders and their advisors read every document behind the deal. Diligence runs through it: each request is answered from it, each disclosure is dated in it, and access is controlled document by document. A room that is incomplete or out of order slows the deal and gives a buyer reasons to reopen terms. Our quality of earnings tool now includes the data room, so each adjusted figure sits next to the documents that support it, and the room and the report tell the same story.

Every document has a place, a version and a reason to be there. The room is secure, easy to move through, named the same way throughout, controlled by version, and arranged around what the financial, legal, tax, people, operations, compliance, IT, insurance and lender reviewers will ask. Sensitive material is released in stages, to the right people, when the deal calls for it.

Who owns the company, on paper

The first thing a buyer's counsel confirms, before any number is discussed.What goes in

Corporate and ownership

Formation papers, operating agreement or bylaws, ownership table, board minutes, subsidiaries and changes in ownership.

Results a buyer can rebuild

Every period in the same format, ready to tie to the ledger.What goes in

Financial statements

Annual and monthly statements, year-to-date and trailing-twelve-month results, trial balances, ledgers, reconciliations and management reports.

Tax history, reconciled

Tax exposure a buyer would price in, found and sized first.What goes in

Tax

Federal, state, local, payroll, and sales and use filings, correspondence, audits, elections and material exposures.

Where the revenue comes from

The detail behind every revenue figure a buyer will use.What goes in

Revenue and customers

Revenue by customer, payer, provider, product, site and contract, with pipeline, backlog and concentration.

Contracts that need consent to transfer

Marked before a buyer's counsel finds them.What goes in

Material contracts

Customer, supplier, referral, distribution, service and affiliation agreements, with change-of-control and exclusivity terms marked.

Every claim, open or closed

Disclosed on your terms rather than discovered on the buyer's.What goes in

Legal and litigation

Open and past claims, disputes, settlements, investigations, notices, letters from counsel and possible liabilities.

What gets paid off at closing

Payoff letters and liens, ready for the closing statement.What goes in

Debt and financing

Loans and credit lines, leases, guarantees, liens, covenants, equipment financing and payoff letters.

The people a buyer is paying for

Who stays, what they cost and what they are owed.What goes in

Human resources

Staff roster, pay and benefits, the handbook, contractors, retention and turnover, and employment agreements.

Who runs the business after the sale

A buyer prices key-person risk from this folder.What goes in

Organization and management

Organization chart, role descriptions, who decides what, succession, key-person reliance and the transition plan.

How the work actually gets done

Written processes a new owner can run on the first day.What goes in

Operations and SOPs

How the work gets done: delivery, production, purchasing, scheduling, billing, collections, quality and KPIs.

Permission to keep operating

Every license and renewal date a buyer's counsel will ask for.What goes in

Licenses and regulatory

Permits, professional and facility licenses, accreditations, registrations, inspection results and renewal dates.

Compliance, documented

The record a buyer's regulatory review starts from.What goes in

Compliance and quality

Compliance policies and training, internal reviews, incident records and corrective actions, privacy, billing, safety and quality programs.

Coverage and claims history

What a buyer reads to price the risk it would inherit.What goes in

Insurance

Current policies and claims history, loss runs, professional liability, cyber, property, workers' compensation and directors and officers coverage.

The space the business runs in

Leases and consents that can delay a closing when found late.What goes in

Real estate

Leases and deeds, rent schedules, renewal options, landlord consents, environmental reports and any property owned by a related party.

Systems, access and security

Documented before the buyer's security review.What goes in

IT and cybersecurity

Systems map, software vendors and licenses, access controls, backups, security incidents, data privacy and recovery plans.

Proof the company owns what it sells

For a software company, much of the value sits in this folder.What goes in

Intellectual property

Patents, trademarks, copyrights, domain names, owned software, trade secrets, licenses in and out, and invention assignments.

What the equipment and stock are worth

Support for the values a buyer would otherwise discount.What goes in

Assets, CapEx and inventory

Fixed-asset register, equipment and maintenance records, capital plans, inventory aging, slow-moving stock and support for values.

The records your sector is judged on

Retention schedules for software, credentialing files for healthcare.What goes in

Industry-specific diligence

Software revenue and retention schedules, healthcare payer and credentialing files, or other records specific to the sector.

How the room is managed

Each folder follows one index and one naming rule, and each document shows its version date, its owner and how confidential it is. A request tracker shows what was asked for, what is in the room, what is still open, what needs an explanation and which version counts.

The most sensitive records, such as patient or customer identifiers, employee personal data, pricing, trade secrets, source code and some contracts, may be redacted, shown only to a clean team, covered by a second confidentiality agreement or released in stages. Security is a matter of what is disclosed and when, not only of the software that holds it.

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Buyer-ready due-diligence file

Have the answer ready before the request arrives.

The diligence file is how the data room gets used during a deal. Each buyer request is linked to its documents, its schedules, management's explanation, the person who owns the issue and what happens next. No one can predict every question. The point is a system that answers the material ones quickly, correctly and the same way each time.

Master FDD request list

The standard FDD requests, answered before a buyer sends them.Turn over

One owner and one date per item

Built from the financial due diligence requests that buyers and their accounting firms send, tailored to this deal and linked to the data room, with an owner, a priority, a status and a due date for each item.

Financial evidence binder

The proof behind every number a buyer will question.Turn over

Behind each figure

The detail behind adjusted earnings and each add-back, revenue trends, concentration, working capital, debt-like items, cash flow, CapEx and the larger balance-sheet accounts.

Risk and remediation log

Bad news handled on your schedule, not the buyer's.Turn over

Decided before a buyer asks

Known issues ranked by what they could cost, with an owner, a fix, a plan for disclosure and the documents behind the final answer.

Buyer Q&A library

Consistent answers on every call, from every member of the team.Turn over

Written once

Written answers to the questions every buyer asks, tied to documents and schedules, so management explains each point once.

Management-call preparation

Prepared for the calls that shape a buyer's view.Turn over

Who answers what

Key messages, the follow-up questions to expect, and who answers which kind of question: financial, legal, operational, regulatory or deal terms.

Refresh and closing support

The file stays current from the letter of intent to closing.Turn over

Every month until closing

Each new month of results, the rolling twelve months, working capital, debt, buyer and lender requests and any material change, kept current through confirmatory diligence to closing.

The best answer in diligence is not the quickest guess. It is a correct answer, given quickly, from the same evidence every time.

Documentation, SOPs and transferability

Show the business runs without the owner in the room.

A buyer is paying for future earnings, and those depend on customers, staff, processes, compliance, quality, relationships and decisions moving to a new owner intact. Written procedures are how that shows.

Core operating documentation

Today's organization chart, role descriptions, reporting lines, and who decides and approves what.
How customers are won, priced, contracted, onboarded, served and renewed, and how complaints are resolved.
Delivery, clinical and production workflows, scheduling and capacity, quality control, safety and how exceptions are handled.
Billing and coding, collections, purchasing and inventory, vendor management, payroll, expense approval and cash handling.
Hiring and onboarding, reviews, pay and benefits, training, retention, exits and the rules for contractors.
Regulatory and privacy procedures, cybersecurity and incident response, continuity and recovery plans, and compliance monitoring.
How each monthly KPI is defined, who owns each report, the meeting rhythm, how variances are reviewed and how fixes are followed up.

What buyers want to see

Clear responsibility beyond the founder.
Repeatable delivery and quality standards.
Documented financial and operating controls.
Measurable KPIs with regular management review.
Who steps into each key role, and when.
Compliance and risk management built into operations.

Request a Confidential Preparation Review

Our team

Financial preparation shaped by the deal, not general cleanup.

Good sell-side QoE work combines transaction accounting with experience running sale processes. Capital Row brings three groups together: deal advisors who know what buyers and lenders will ask, independent professionals who reconcile and analyze the numbers, and a project team that organizes the evidence and supports diligence through closing.

Capital Row partners with licensed certified public accountants, engaged separately, to perform the sell-side Quality of Earnings.

M&A deal leadership

The deal story, and the questions most likely to move price.The role

Capital Row's part

Capital Row frames the deal: the story for buyers, where value is sensitive, what the structure means, the timing, and the financial questions most likely to move price or terms.

Transaction accounting and QoE

The accounting work, done by an independent partner firm.The role

Accounting and schedules

An independent partner firm does the accounting work: tying figures to source data, adjusted earnings, revenue and margin, working capital, the balance sheet, cash flow and the supporting schedules.

Data room and diligence management

One record the whole deal team works from.The role

Day to day

Sets up the index, gathers documents, controls versions, tracks every request, releases sensitive items in stages, links evidence across files and keeps the deal team working from one record.

Industry-specific analysis

The analysis tailored to how your sector earns.The role

By sector

Fits the work to the business: recurring software revenue, healthcare reimbursement and provider pay, multi-site operations and what drives each sector.

Financial institutionalization

Books and reporting built to keep running after the sale.The role

With management

Works with management on the chart of accounts, the month-end close, accruals, reconciliations, segment reports, KPIs, forecasts and the documents buyers expect behind the books.

Independent specialists as needed

Credentialed professionals when the work calls for an opinion.The role

When they are brought in

Brings in independent certified public accountants and tax, legal, regulatory, compliance, insurance, cybersecurity and valuation professionals when the work calls for their credentials or opinions.

What qualifies a team for this work

Ask any team for specifics, not adjectives: multi-year and trailing-twelve-month analysis, detailed spreadsheet schedules, ledger and source-system reconciliation, cash-to-accrual conversion, multiple entities, add-back support, working capital and debt-like items, industry revenue models, buyer and lender diligence, and management Q&A.

The same team has to explain its findings plainly to owners who are not accountants, and still hold its ground with private equity, strategic buyers, lenders, attorneys and the buyer's accounting firm.

The integrated advantage

The QoE follows the sale strategy you are actually running.
The data room tells the same financial story as the QoE.
Risks are ranked by their effect on the transaction.
Management is prepared for buyer questions.
Financial updates continue through diligence.
Preparation work stays connected to negotiation and closing.

How it works

A preparation project with a start, an end and a date to go to market.

Scope and timing depend on the size of the business, the state of the books, how many entities and sites there are, how complex the systems are, when the deal is planned and how complete the records are. Work runs in phases: what the deal needs now goes first, and longer-term fixes to finance and operations run alongside.

Diagnose and scope

What you have, what the deal needs and the plan between them.The step

What we look at

We look at ownership, past financials, accounting systems, how often reports are produced, the deal you have in mind, its timing, known issues and the documents you have. Then we set the work plan, who does what, the data request and what you will receive.

Secure intake and data integrity

Your records in one controlled place, with every gap listed.The step

How data comes in

Data comes in through a secure channel. We check that it is complete, map where each figure comes from, reconcile the top-line totals, list what is missing and set up controlled working files.

Reconcile and institutionalize

The books corrected and the reporting made repeatable.The step

What gets fixed

Material accounting issues are corrected or scheduled, accounts remapped, policies written down, reconciliations built, reporting made consistent, and the month-end close and management reports given a repeatable process.

Analyze and normalize earnings

The schedules a buyer's accountants will read first.The step

Earnings, normalized

The QoE schedules: the adjusted earnings bridge and the support for each add-back, revenue and margin, working capital, the balance sheet, cash flow, CapEx, trends, the forecast and the risks found.

Build, organize and review

Everything read the way a buyer will read it, before a buyer does.The step

What the review covers

The data room and diligence file are assembled and cross-referenced, management's answers prepared, the financial story read as a buyer would read it, and each issue found either resolved or disclosed.

Market, refresh and defend

Support that stays on after the letter of intent, through closing.The step

During the deal

As each month closes, the analysis is updated. Buyer and lender requests are answered, diligence calls attended where useful, and the financial positions kept the same from negotiation to closing.

Deliverables

Working files you keep using, not a report that sits on a shelf.

What you receive depends on scope, and all of it stays useful to management through the deal. Each engagement states which files you can edit, which report buyers see, who runs the data room, how updates work and who answers buyer and lender questions.

Data request and source-system map

Every item needed, who holds it, where it lives, its format and its status.

QoE report and executive summary

What was found, normalized earnings, trends, risks and what each means for the deal.

Historical reconciliation workbook

Month-by-month and year-by-year ties between the statements, ledgers, tax returns, bank and payroll records and other source systems.

Adjusted earnings bridge

From reported results to adjusted earnings, with each category, calculation and supporting document referenced.

Add-back evidence schedule

Invoices, payroll, contracts, ledger detail, bank support and the rationale for each material adjustment.

Revenue and gross-margin analysis

Trends and mix, concentration, recurring revenue, price and volume, churn, backlog and profit by segment.

Working-capital analysis

Monthly trends, normalization adjustments, seasonality, method and support for a possible peg.

Balance-sheet and debt-like review

A schedule of debt, accruals, taxes, deposits, leases and the other items that reduce what the owner receives at closing.

Cash-flow and CapEx schedules

How much of adjusted earnings becomes cash, maintenance and growth spending, and investment that has been put off.

Virtual data room and index

Organized, access-controlled, named one way throughout and linked to each diligence request.

Management reporting package

Monthly financials, KPIs, budget against actual, variance commentary and reporting ownership.

Risk log, written answers and updates

Who owns each issue, how it is fixed, what buyers are told, and updates through confirmatory diligence.

Who this is for

For owners selling to buyers who will check every material number.

It matters most for founder-owned and lower-middle-market companies heading toward a full sale, a majority or minority investment, a partner buyout, a strategic deal or a refinancing with institutional lenders.

Vertical software and SaaS companies

Where recurring revenue and retention drive the price.Why it fits

Recurring revenue, read closely

Where recurring and one-time revenue, retention, deferred revenue, capitalized development costs and customer concentration must be clearly analyzed.

Recurring service businesses

Where contracts and renewals decide what earnings are worth.Why it fits

Contracts and renewals

Where contract terms, recurring and project revenue, customer retention, labor productivity, renewals and concentration drive the analysis.

Healthcare and dental organizations

Where reimbursement and provider pay change normalized earnings.Why it fits

Payers, providers and compliance

Where payer mix, provider pay, reimbursement, billing and collections, credentialing, compliance, related-party management fees and the owner's own clinical work all change what normalized earnings are.

Multi-entity or multi-location groups

Where the combined results are hard to explain.Why it fits

Entities and shared costs

Where intercompany entries, shared costs, management fees, acquisitions, site-level economics or uneven accounting make the combined results hard to explain.

Owners with significant add-backs

Where add-backs need proof before they hold.Why it fits

Owner and one-time costs

Where personal, related-party, discretionary and one-time costs, owner pay and pro forma changes need support and must be pulled apart from recurring results.

Businesses that have outgrown their books

Where the finance function is still built for a smaller company.Why it fits

Where the gap shows

Where revenue and operations have grown faster than the finance team, the month-end close, the reporting systems, the controls and the documents an institutional buyer will ask for.

Every engagement starts with a conversation about the business and the transaction ahead.

Before the full report

Where preparation fits.

Preparation is Capital Row's own first pass, done before the full report. We trace reported earnings to source documents and mark each adjustment supported or unsupported. It is not a quality of earnings report, and it does not replace one.

Request a Pre-Market Assessment

What owners ask

Sell-side QoE and financial institutionalization.

The Quality of Earnings

What is a sell-side Quality of Earnings report?

Transaction-focused financial diligence prepared for the seller before going to market. It reconciles reported results to adjusted earnings and documents the evidence behind each material adjustment.

Why should the seller commission a QoE before the buyer does?

Issues found before the letter of intent can be fixed, explained or priced on your terms. Issues found after it are negotiated while the buyer holds exclusivity.

How is sell-side QoE different from buy-side QoE?

The seller's report sets a documented starting point. The buyer's report is paid for by the buyer, to support its own case and to look for what could go wrong. A buyer may still commission one.

Is a Quality of Earnings report an audit?

No. It is analysis prepared for a transaction. It is not an audit, a review, a compilation, a valuation or an assurance opinion.

Does a sell-side QoE raise the price?

It does not change what the business earned, and no outcome is guaranteed. It shows how much of the earnings can be supported, and it brings out early the issues that often lead to price changes late in a deal.

What is normalized EBITDA?

Adjusted earnings. It is what the business earns once one-time, nonoperating, owner-specific and misclassified items come out, each with support. It is the figure an offer is priced from.

What are legitimate EBITDA add-backs?

Adjustments for costs or income that will not continue under a new owner and that can be documented, such as above-market owner compensation, personal expenses and one-time professional fees. An add-back without evidence is unlikely to hold up when a buyer reviews it.

What is a net working-capital peg and why does it matter?

It is the level of working capital the seller agrees to deliver at closing. If working capital at closing is below the peg, the price is usually adjusted down by the difference.

What are debt-like items?

Obligations a buyer treats like debt and deducts from the price, such as unpaid taxes, deferred compensation, accrued bonuses, customer deposits and some leases.

What if my books are cash-basis, tax-basis or out of date?

That is common. Part of the work is converting material activity to accrual schedules a transaction can use and reconciling the records to source.

What documents are normally required?

Usually three years of P&Ls and balance sheets, this year to date and the trailing twelve months, the general ledger, tax returns, bank statements, payroll records and the main contracts. The full data request is agreed when the work is scoped.

How long does the process take?

It depends on the size of the business, the number of entities and systems, and the condition of the records. The schedule is set with you after the first review.

When should we begin?

Before you go to market, and early enough to fix what the work finds.

What if the QoE finds a problem?

That is the reason to do it first. The finding is sized, and you decide whether to correct it, document it or disclose it before a buyer sees it.

Do buyers rely on a QoE the seller paid for?

Buyers and lenders may still do their own diligence. A QoE performed by an independent firm, with schedules tied to source records, gives them a documented starting point.

How is confidentiality protected?

Data is collected through a secure process, kept in a controlled working-file environment and released in stages. Sensitive records can be redacted or limited to a clean team.

Technology and AI

Is AI used in Quality of Earnings work?

Increasingly, yes, mostly to read and organize documents faster. Used well, it shortens extraction and reconciliation time. It does not replace source documents or professional judgment. Our own financial preparation starts with repeatable calculations and evidence that can be traced to its source, and advisors review every step. Technology creates capacity. Human expertise turns that capacity into trusted advice.

What is the difference between deterministic and probabilistic AI?

A deterministic system gives the same answer every time from the same inputs, the way a formula does. A probabilistic system, including the large language models behind most AI tools, produces its most likely answer, and that answer can change from one run to the next. In diligence the difference matters. A number in an earnings bridge has to come out the same way every time and tie to a document.

What is agentic AI, and does it belong in diligence?

Agentic AI is software that plans and carries out a series of steps by itself, such as collecting files, matching records and drafting requests. It is useful for the routine work of gathering and organizing. It should not decide what counts as an adjustment or what a finding means. Those calls stay with accountable professionals.

What makes an AI-assisted solution qualified for this work?

Ask five questions of any provider. Does every figure trace to a source document? Are the calculations deterministic, so the same inputs give the same result? Are probabilistic tools limited to reading, sorting and flagging, with a person reviewing what they produce? Does your data stay in a secure environment, and is it kept out of the training of outside models? Is a named professional accountable for the conclusions?

Next step

See your numbers the way a buyer will, first.

Start with a confidential look at your reporting, your timing, how your company is organized and the records you have today. From there we set the right scope, from a focused sell-side QoE to a full rebuild of the books, the data room and the diligence file.

Helpful information for the first review

P&Ls and balance sheets for the last three years
Year-to-date and trailing-twelve-month results
How many legal entities, sites and accounting systems you have
The kind of deal you are considering, and roughly when
Any concerns you already have about the accounting, add-backs, working capital or documents

Request a Confidential Preparation Review Request a Sell-Side QoE

Come prepared.

Capital Row provides M&A advisory and transaction preparation. Accounting, tax, legal, regulatory, compliance, valuation, attestation and other professional work is done by qualified third parties under their own engagements. A QoE is not an audit, a review, a valuation, or a guarantee of value or of closing. Capital Row arranges the sell-side Quality of Earnings with licensed certified public accountants engaged separately. The accountant is responsible for the method, findings and conclusions. Capital Row may supply deal context and proposed normalization items, and does not control the accountant’s conclusions.