Quality of Earnings - The Report That Shapes Your Sale Price

You’ve negotiated a letter of intent at a 5.5x EBITDA multiple on your $2.8 million adjusted earnings. The champagne is chilling. Then the buyer’s Quality of Earnings report lands, and suddenly your $2.8 million EBITDA is $2.1 million. What happened? The forensic accountants challenged $700,000 of your adjustments: they reduced your owner compensation add-back by $150,000, eliminated $350,000 in legal fees you’d classified as non-recurring, and disallowed your $200,000 facility-related adjustments. At 5.5x, your deal just lost $3.85 million in enterprise value. In our experience advising mid-market transactions, significant repricing like this occurs more often than sellers expect, and it’s frequently preventable with proper preparation.

Executive Summary

The Quality of Earnings (QofE) analysis is among the most consequential examinations in middle market M&A transactions, often determining the gap between represented and realized EBITDA, and therefore the actual purchase price. Conducted by forensic accountants retained by the buyer, this deep-dive examination determines whether your represented EBITDA holds up under scrutiny or crumbles. For business owners in the $2 million to $20 million revenue range (a segment where QofE analysis becomes particularly impactful because smaller transactions often receive abbreviated diligence while larger businesses typically have more mature financial controls), understanding the QofE process before you enter it separates sophisticated sellers who protect their valuations from those who watch deals collapse or reprice dramatically during due diligence.

This article explains what Quality of Earnings analysis examines, how forensic accountants challenge your financial representations, and the specific preparation steps that can minimize negative findings. We’ll cover the five core areas of QofE scrutiny: EBITDA adjustment validation, revenue quality assessment, cost sustainability analysis, working capital normalization, and financial controls evaluation. More importantly, we’ll provide a diligence preparation framework that can help you anticipate buyer questions, defend your positions with documentation, and maintain negotiating power throughout the process.

The owners who tend to achieve their target valuations often combine two things: strong baseline financial quality and sophisticated preparation that anticipates forensic scrutiny. Of these two, preparation is frequently the difference-maker because it can transform vulnerability into defensible positioning. But preparation addresses representation quality; it cannot overcome fundamental business weaknesses like revenue concentration or unsustainable cost structures. Market conditions and competitive process dynamics also play important roles in outcome determination.

Introduction

Every business owner preparing for an exit has heard the term “due diligence.” Most understand it involves document requests, management interviews, and financial analysis. Far fewer understand that within this process, one specific workstream, the Quality of Earnings analysis, often determines whether your deal closes at the agreed price, reprices significantly, or falls apart entirely.

Quality of Earnings analysis evolved into standard practice in private equity transactions over the past several decades and has since become standard in lower middle market deals. What began as a verification exercise has evolved into a sophisticated forensic examination. Based on our firm’s experience across transactions in the $5 million to $25 million enterprise value range, QofE analysis duration varies significantly based on transaction complexity and accounting system maturity. Well-organized service businesses with mature accounting systems may complete QofE analysis in four to six weeks, while manufacturing businesses with complex inventory or multi-location operations often require eight to twelve weeks or longer. Your specific timeline will depend on factors including record organization, adjustment complexity, and buyer thoroughness.

For sellers, this creates tension. You’ve presented your business at its best, with normalized EBITDA that reflects adjustments for owner compensation, one-time expenses, and pro forma changes. The QofE team’s job is to challenge every one of those adjustments. They’re not adversarial by nature, but their professional obligation is to the buyer who retained them. Generally, every dollar they validate for you is a dollar their client pays. Every dollar they eliminate is money their client saves.

This dynamic makes Quality of Earnings preparation valuable. The owners who handle this process better typically understand what the analysis examines, anticipate the challenges to their positions, and enter due diligence with documentation that supports their representations. They don’t view QofE as an audit to survive, they view it as a conversation they can influence through preparation.

One critical distinction before we proceed: preparation can improve valuations by addressing representation quality and documentation rigor. It cannot overcome fundamental business vulnerabilities. If your revenue is concentrated, your margins are under pressure, your customer relationships are fragile, or your competitive position is weak, preparation will not remedy these issues. Identify true business vulnerabilities now and address them at the operational level: diversify customers, improve margins, build contractual relationships. Use QofE preparation to defend the business you’ve built, not to disguise business realities.

What Quality of Earnings Analysis Actually Examines

The term “Quality of Earnings” is somewhat misleading. While earnings verification sits at the center of the analysis, modern QofE examinations extend far beyond the income statement. Understanding the full scope of what buyers examine helps you prepare completely.

The EBITDA Reconstruction

The QofE team’s primary task is reconstructing your EBITDA from source documents rather than accepting your calculations. Most thorough QofE analyses request general ledgers, bank statements, credit card statements, payroll records, and supporting documentation for every adjustment you’ve claimed. While approaches vary by transaction and buyer, expect thorough documentation requests.

This reconstruction process typically uncovers discrepancies in three categories. First, mathematical or categorization errors that neither you nor your accountant caught. Second, aggressive adjustments that technically qualify but push definitional boundaries. Third, adjustments that simply don’t hold up under scrutiny: expenses you claimed were one-time that prove recurring, or owner compensation adjustments that exceed market-rate replacement costs.

The forensic accountants typically build their own EBITDA bridge, starting from your reported net income and making their validated adjustments. The gap between your adjusted EBITDA and their calculated figure becomes the central negotiating point for deal economics. And this is important to understand: Quality of Earnings findings are not objective determinations. They’re professional judgments made by buyer-retained accountants using assumptions and methodologies that can be questioned. When you receive findings that conflict with your positions, remember that this is the beginning of negotiation, not the final answer.

Revenue Quality Assessment

Beyond EBITDA, Quality of Earnings analysis examines whether your revenue base is sustainable and accurately represented. This involves several analytical procedures.

Customer concentration analysis determines what percentage of revenue comes from your top customers and whether those relationships are contractual, at-will, or dependent on personal relationships with the departing owner. Revenue with high concentration or relationship dependency typically receives a “quality” discount in buyer thinking.

Revenue recognition testing verifies that you’re recording revenue appropriately: not accelerating recognition to inflate current-period results or deferring revenue recognition to smooth earnings. Forensic accountants will sample contracts and trace recognition timing.

Recurring versus non-recurring revenue breakdown separates contractual recurring revenue (highest quality) from repeat customer revenue (medium quality) from transactional revenue (lowest quality). The composition of your revenue base directly affects how buyers value your earnings stream.

Backlog and pipeline analysis examines whether your forward-looking revenue projections are supported by contracts, committed orders, or merely hopeful forecasting.

Cost Sustainability Analysis

Just as QofE examines revenue quality, it scrutinizes whether your cost structure is sustainable or artificially suppressed. Several red flags trigger deeper examination.

Deferred maintenance on facilities or equipment can create liabilities the buyer will inherit. QofE teams often examine capital expenditure patterns relative to depreciation, looking for signs of underinvestment.

Below-market compensation for key employees raises concerns about retention risk and needed salary increases post-close. If your controller makes 30% below market rate, buyers will likely adjust for the needed increase.

Related-party transactions at non-market terms can artificially suppress costs. If you lease your building from yourself at below-market rent, buyers typically adjust to fair market rent.

One-time cost reductions that won’t persist: temporary vendor concessions, delayed hiring, reduced marketing spending, may need adjustments in the opposite direction of typical add-backs.

Working Capital Normalization

The Quality of Earnings process also establishes normalized working capital: the amount of operating cash the business needs to function. This calculation determines what you must leave in the business at closing versus what you take as proceeds.

QofE teams analyze 12-24 months of working capital components: accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and deferred revenue. They calculate average levels and seasonal patterns to establish a “peg” that represents normal working capital needs.

If your working capital at closing exceeds the peg, you receive a dollar-for-dollar credit. If it falls short, you face a dollar-for-dollar reduction in proceeds. For mid-market businesses with significant inventory or receivables, working capital adjustments at period-end can be substantial. In our experience with manufacturing and distribution businesses in the $5 million to $25 million revenue range, we’ve observed working capital adjustments ranging from $100,000 to $400,000 or more, depending on business seasonality and balance sheet composition. Service businesses with minimal inventory typically see smaller adjustments, often in the $30,000 to $100,000 range. Your specific situation will depend on your business model and balance sheet characteristics.

The sophistication of working capital analysis has increased substantially. Modern QofE reports examine days sales outstanding trends, inventory turns, aging profiles, and collection patterns, all seeking evidence of window-dressing or deteriorating fundamentals.

Financial Controls Evaluation

While not always formalized, Quality of Earnings analysis implicitly evaluates your financial controls and reporting infrastructure. Weak controls create buyer concerns about the reliability of historical data and the accuracy of their valuation basis.

QofE teams typically note when supporting documentation is incomplete, when accounting policies are inconsistently applied, when reconciliations reveal unexplained variances, and when internal reports don’t tie to external financials. These observations may not directly affect EBITDA calculations, but they influence buyer confidence and deal structure.

Buyers facing control concerns often require larger escrow holdbacks, longer earnout periods, or more extensive representations and warranties to protect themselves from undiscovered issues.

How QofE Emphasis Varies by Business Model

While the five core examination areas apply broadly, their relative importance depends on your business model. Service and consulting businesses typically face intense scrutiny on customer concentration (are major clients contractual or relationship-based?) and the sustainability of labor costs. Product-based businesses encounter deeper working capital analysis and inventory valuation challenges. Project-based businesses (construction, implementation services) face revenue recognition scrutiny particular to milestone-based billing. SaaS and subscription businesses experience different revenue quality assessments focused on recurring revenue sustainability and churn assumptions.

The focus of Quality of Earnings analysis also depends on buyer type. Financial buyers (private equity firms) often prioritize EBITDA sustainability for debt servicing and valuation multiples. Strategic buyers may emphasize cost structure (identifying synergy opportunities) and revenue quality (assessing integration risk). Understanding your likely buyer type and your specific business model helps you prioritize preparation accordingly.

Common QofE Findings That Challenge Value

Understanding the patterns that trigger QofE adjustments helps you audit your own financials before buyers do. Certain findings appear repeatedly across lower middle market transactions.

Owner Compensation Adjustments That Don’t Hold Up

The most contested QofE area often involves add-backs for above-market owner compensation. Sellers routinely adjust for the difference between what they pay themselves and what a market-rate replacement would earn. The challenge comes in defending the replacement cost estimate.

Most QofE teams use salary surveys, industry data, and comparable job postings to validate replacement costs. If you’re claiming your $350,000 compensation should be replaced at $175,000, you need job descriptions, market data, and reasonable assumptions to support that position. Without documentation, forensic accountants typically use conservative estimates that reduce your add-back.

The same scrutiny applies to owner benefits: personal vehicles, club memberships, family health insurance, retirement contributions. Each needs documentation showing the expense was genuinely personal rather than necessary for business operations.

One-Time Expenses That Recur

Add-backs for non-recurring expenses receive intense scrutiny because sellers are incentivized to categorize recurring expenses as one-time events. QofE teams typically analyze multiple years of expense detail, looking for “one-time” items that appear repeatedly.

Legal fees, professional expenses, bad debt write-offs, equipment repairs, and consulting costs often reveal patterns inconsistent with non-recurring classification. Patterns matter here: if you’ve claimed legal defense as non-recurring in three consecutive years, QofE teams will likely treat this as a recurring cost. But context also matters: if years one through three involved separate, non-repeating events (merger litigation, patent dispute, shareholder lawsuit), you can defend multiple one-time adjustments with documentation of each distinct event.

The solution involves granular documentation. Rather than adding back all legal fees as non-recurring, separate litigation defense (potentially one-time) from contract review and corporate maintenance (clearly recurring).

Revenue Recognition Timing Issues

Aggressive revenue recognition practices regularly surface during Quality of Earnings analysis. Common issues include:

Recognizing revenue before delivery or service completion, particularly in project-based businesses where percentage-of-completion accounting creates estimation opportunities.

Bill-and-hold arrangements where customers are invoiced for goods that remain in your possession, often used to accelerate year-end revenue.

Channel stuffing where quarter-end or year-end results are boosted by pushing inventory into distribution channels, creating returns and chargebacks in subsequent periods.

Side agreements that modify standard contract terms, often revealed when QofE teams examine the largest transactions in detail.

Any pattern of revenue concentration in final months of periods may trigger additional testing and can result in revenue quality adjustments.

Related-Party Transaction Adjustments

Business owners commonly structure transactions with related parties: leasing buildings from personal holding companies, employing family members, purchasing services from entities they own. These arrangements often carry non-market terms that QofE analysis typically normalizes.

If your facilities lease is 30% below market rent, buyers will likely adjust EBITDA downward for the difference. If family members on payroll are overcompensated relative to their roles, buyers will challenge those expense levels. If you’re purchasing materials from a related entity at above-market prices, that differential affects normalized profitability.

Normalizing related-party transactions requires thoughtful assessment. Examine every agreement with connected entities and assess whether terms approximate market equivalents. For building leases, compare to commercial leases in your market for similar properties. For compensation, use salary surveys and job postings. If terms are materially below market (20% or more), acknowledge that buyers will likely adjust: either normalize now or accept the adjustment during diligence. If terms are close to market but defensible differences exist (for example, a family member’s lease is 10% below market due to a longer-term commitment), prepare documentation explaining the relationship and terms. The goal isn’t perfection; it’s avoiding surprises.

Working Capital Manipulation

End-of-period working capital levels can be temporarily boosted through collection acceleration, payment delays, or inventory reductions. QofE analysis specifically looks for these patterns by examining:

Collection patterns in the months surrounding period-ends versus mid-period months.

Payment patterns showing bunched disbursements after period-end close.

Inventory levels that spike immediately after period-end, suggesting artificial reduction.

These patterns typically result in “normalization” adjustments that increase the working capital peg and reduce your closing proceeds.

Preparing for Quality of Earnings Analysis

The most effective QofE preparation begins 18-24 months before a transaction, but meaningful improvement is possible in shorter timeframes. Preparation falls into three categories: documentation, policy alignment, and position defense. Before diving into these categories, you must first distinguish between representation issues (which preparation can address) and fundamental business issues (which require operational changes, not documentation).

If your revenue is genuinely concentrated with customers you won’t retain, if your costs are structurally high, or if your accounting reflects short-term optimization rather than operational reality, preparation delays the reckoning but doesn’t prevent repricing. Preparation defends your adjustments; it cannot create sustainability where it doesn’t exist.

Build Your Documentation Foundation

Documentation is necessary but not sufficient for QofE success. Before gathering support for an EBITDA adjustment, assess whether it’s actually defensible. Is the owner compensation adjustment within market ranges for the role and geography? Is the “one-time” expense truly non-recurring, or does it appear regularly? Would you stake your reputation on this adjustment in a negotiation with a knowledgeable buyer? Only document and defend adjustments that survive this vetting. For adjustments that won’t hold up, either eliminate them before entering negotiations or accept that QofE will challenge them.

For significant EBITDA adjustments you intend to claim, create adjustment schedules that explain each add-back, provide supporting calculations, and include source documents.

For owner compensation adjustments, compile market salary surveys, job descriptions for replacement roles, and comparable position postings. Document how responsibilities would be allocated post-transition.

For non-recurring expense adjustments, maintain a detailed log throughout the year identifying specific events, amounts, and reasons for non-recurring classification. Include invoices, contracts, and explanatory memos.

For pro forma adjustments (costs being eliminated or added post-close), document the specific actions and their timing. New contract terms, discontinued services, and headcount changes all need supporting evidence.

Align Accounting Policies With Market Expectations

QofE friction often results from accounting policy choices that differ from buyer expectations or industry norms. Review your policies for:

Revenue recognition timing relative to industry standards and applicable accounting guidance.

Expense capitalization versus expensing policies, particularly for software development, tooling, and process improvement costs.

Reserve calculations for bad debt, warranty obligations, and returns.

Inventory valuation methods and overhead allocation approaches.

Where your policies are more aggressive than industry norms, consider whether adjustment makes sense before entering a transaction process.

Develop Position Defense Packages

For every significant adjustment or representation, prepare a defense package anticipating QofE challenges. This package should include:

The calculation methodology and all supporting data.

Comparison to industry benchmarks or third-party validation.

Alternative calculation approaches showing similar results.

Documentation of relevant contracts, agreements, or policies.

Management explanations for anomalies or unusual patterns.

When forensic accountants receive organized, documented positions, they may spend less time searching for issues and more time validating your representations. The quality of your preparation can influence the quality of your outcome, though it cannot guarantee agreement on contested positions, and buyer-retained teams may still reach different conclusions using different methodologies.

The Strategic Value of Sell-Side QofE

An increasingly common practice among sophisticated sellers involves commissioning your own Quality of Earnings analysis before going to market. This sell-side QofE, conducted by a reputable accounting firm, provides several potential advantages, though outcomes vary significantly based on your specific circumstances, business complexity, and buyer approach.

First, you may discover issues before buyers do. If your adjusted EBITDA won’t hold up, you’d rather know during preparation than during negotiation. Early discovery allows remediation, expectation adjustment, or deal timing modification.

Second, you can establish an analytical baseline. A professional sell-side QofE creates a starting point for buyer discussions. Rather than reacting to buyer findings, you’re discussing variances from an established baseline.

Third, commissioning sell-side QofE may signal sophistication to buyers and their advisors. This can potentially improve negotiating dynamics, though the causal mechanism is often the cleaner finances and preparation that typically accompany the decision to commission QofE, not the report itself.

Fourth, you may accelerate the process. When buyer-retained accountants receive a thorough sell-side QofE, their scope can shift toward validation rather than discovery. This may reduce diligence timelines and maintain deal momentum, though results vary.

But understand the timing, costs, and risks before proceeding. Sell-side QofE is most effective when commissioned before going to market, so that your analytical baseline is established before buyer discussions begin. The analysis typically requires 20-30 hours of your finance team’s time and full access to accounting records. More importantly, it will identify vulnerabilities, and you’ll need to decide whether to remediate, disclose, or accept that buyers will challenge these items.

Cost considerations: Based on conversations with transaction advisors in major metropolitan markets, sell-side QofE analysis typically costs $40,000 to $125,000 for mid-market transactions in the $5 million to $25 million enterprise value range, with costs varying based on business complexity, geographic location, and accounting system maturity. Businesses with complex inventory, multiple locations, or significant related-party transactions trend toward the higher end. Regional markets may see lower pricing. Obtain specific quotes from qualified firms before committing.

Important limitations: Sell-side QofE establishes an analytical baseline and helps you identify vulnerabilities. But buyer-retained QofE teams may still reach different conclusions on contested adjustments, sometimes more aggressive on certain positions, sometimes less, depending on buyer strategy and methodology. In our experience, buyer teams often identify additional issues or reach different conclusions on a meaningful portion of contested adjustments, regardless of sell-side preparation quality. The benefit of sell-side QofE is preparation and transparency, not immunity from repricing. Use it to understand your vulnerabilities, not to prevent all buyer challenges.

Alternative approaches: Sell-side QofE isn’t the only preparation option. For businesses with relatively clean financials and straightforward adjustments, focused documentation preparation (working with a transaction-experienced accountant to organize and defend your positions) may provide meaningful benefit at lower cost (typically $15,000 to $35,000 in professional fees plus management time). This alternative is often superior for service businesses with simple balance sheets and limited adjustments, while full sell-side QofE is typically more valuable for businesses with complex inventory, significant adjustments, or first-time sellers unfamiliar with diligence processes.

When Preparation Doesn’t Work

Preparation can improve valuations by addressing representation quality and documentation rigor. It cannot overcome fundamental business vulnerabilities. Understanding when preparation falls short helps you allocate resources wisely.

If your revenue is genuinely concentrated with customers you won’t retain, if your margins are under pressure, if your customer relationships are fragile, or if your competitive position is weak, preparation will not remedy these issues. Similarly, identifying vulnerabilities via sell-side QofE can create negotiating positions (if findings are minor and you’ve addressed them) or negotiating liabilities (if findings suggest you’ve been misrepresenting the business). Understand which scenario applies to your business before commissioning analysis.

What happens if you don’t prepare at all? Based on our firm’s experience across approximately 50 mid-market transactions over the past eight years, the most likely outcome for unprepared sellers is some degree of repricing during buyer diligence. We’ve observed repricing ranging from minimal adjustments to reductions exceeding 20% of expected enterprise value, with poorly documented adjustments being the most common cause. Your poorly documented adjustments will be challenged, buyer contingency thinking will increase, and negotiations may consume executive attention for longer than expected. The worst-case outcome (where you’ve made aggressive adjustments you can’t defend and the buyer discovers them) can result in earnout structures to compensate for risk, or in extreme cases, deal collapse or dramatic repricing.

Realistic cost assessment: Complete QofE preparation isn’t free. Based on our experience, expect total costs including professional fees and management time investment to range from $25,000 to $65,000 for thorough preparation, broken down approximately as follows:

If you add sell-side QofE analysis, costs increase by $40,000 to $125,000 depending on complexity and geography. The question isn’t whether to prepare, but how thoroughly, and whether your preparation should focus on representation issues or fundamental business improvements. For many mid-market transactions, avoiding even modest repricing justifies the preparation investment, but this calculation depends on your specific deal size and risk profile.

Actionable Takeaways

Protecting your valuation through the Quality of Earnings process benefits from specific preparation steps. The time investment varies based on your starting point, but expect to spend three to eight hours per month on ongoing documentation if you’re 18 or more months from transaction, with higher time requirements for businesses with less organized records or more complex adjustments.

Begin documentation now, but vet your positions first. Before gathering support for an EBITDA adjustment, assess whether it’s actually defensible. Only document and defend adjustments that survive honest scrutiny. For adjustments that won’t hold up, either eliminate them before entering negotiations or accept that QofE will challenge them. Create an adjustment register listing every add-back you claim, and for each, gather supporting documents: salary surveys for compensation, invoices and explanatory memos for one-time items, contracts for pro forma changes.

Establish monthly reconciliation discipline. Reconcile balance sheet accounts, investigate variances, and document significant transactions. Most sellers haven’t done this consistently; it reveals patterns that QofE teams will find regardless.

Normalize related-party transactions thoughtfully. Examine every agreement with entities or individuals connected to you and assess whether terms approximate market equivalents. If terms are materially below market (20% or more), either normalize now or prepare to accept adjustments during diligence.

Examine your working capital patterns. Look for end-of-period anomalies that would suggest window-dressing. If patterns exist, address the underlying causes and let normalized levels establish before entering a transaction.

Evaluate preparation approach based on your situation. For transactions above $5 million in enterprise value with complex financials or significant adjustments, sell-side QofE analysis may improve outcomes. For simpler businesses with clean records and straightforward adjustments, focused documentation with a transaction-experienced accountant may provide similar protection at lower cost. Consider your business complexity, adjustment magnitude, and comfort with diligence processes when choosing your approach.

If you’re within 12 months of transaction, shift focus. Move from documentation creation to position defense: identify your riskiest adjustments and develop strong support packages for those specific items. Consider engaging a transaction accountant to audit your intended adjustments and identify vulnerabilities now rather than during buyer diligence.

Engage transaction-experienced accounting support. Your annual tax accountant likely lacks QofE experience. Engage professionals who understand forensic due diligence and can help you prepare defensible positions.

Distinguish preparation issues from fundamental issues. Preparation addresses representation quality. If your real challenges are business fundamentals (customer concentration, competitive positioning, unsustainable costs), address those operationally. Don’t invest in preparing to defend a business reality that itself needs to change.

Budget realistically. Complete preparation typically requires $25,000 to $65,000 in professional fees and management time, with sell-side QofE adding another $40,000 to $125,000 depending on complexity. Factor opportunity costs of management attention into your planning.

Conclusion

Quality of Earnings analysis is a critical examination point in middle market transactions where represented EBITDA is tested against operational reality. It significantly influences whether your deal closes at agreed economics, reprices, or faces structural changes like earnouts. Everything you’ve built, every financial representation you’ve made, every valuation discussion you’ve had, much of it depends on whether your numbers survive forensic examination by professionals whose job is to identify issues.

But this reality shouldn’t intimidate prepared sellers. The QofE process follows predictable patterns, examines known areas, and challenges representations in foreseeable ways. Owners who understand this process, who document their positions, align their accounting with expectations, and address vulnerabilities proactively, tend to achieve better outcomes than those who enter due diligence hoping their financials will hold up. But preparation improves your negotiating position; it doesn’t guarantee protection from repricing, and buyer-retained teams may reach different conclusions regardless of your preparation quality.

Note that this preparation framework assumes you’ve decided to pursue a traditional third-party sale at fair market value. If you’re considering alternatives (strategic partnership, recapitalization with a financial sponsor, sale to existing management, or continued growth), the preparation priorities shift significantly. The QofE preparation outlined here is most critical for owners pursuing a transaction with a financial buyer or unfamiliar strategic buyer where maximizing valuation is the priority.

The difference between watching your valuation decrease during due diligence and closing at your expected price isn’t luck or having cleaner financials from the start, though that certainly helps. It’s often preparation combined with honest assessment of what’s defensible and what isn’t. It’s understanding what Quality of Earnings analysis examines, vetting your positions before buyers do, and building your case before the examination begins. Start that preparation now, and you’ll enter your most important financial negotiation from a position of strength rather than vulnerability.