Most buyers commission their first Quality of Earnings report without ever having seen one. That makes it hard to judge what you're paying for, and easy for a thin financial review to pass itself off as a full QoE. So here is ours, in full.
Below is a complete Standard QoE prepared on Alpine Air HVAC, a fictional residential and light-commercial HVAC company in Denver. The company is invented. The structure, the analysis, and the rigor are exactly what a real engagement delivers.
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The deal, at a glance
| Item | Detail |
|---|---|
| Business | Alpine Air HVAC, Inc. (fictional) · Denver Metro · 14 years operating · 22 FTE |
| Asking price | $3,200,000 |
| Seller-stated EBITDA | $780,000 (a 4.1x multiple on the ask) |
| QoEPro normalized EBITDA | ~$598,000 (a 5.4x implied multiple on the same ask) |
| Verdict | Medium risk. Proceed, subject to price adjustment and contract verification |
GL-level analysis confirmed normalized EBITDA $182K below the seller's stated figure. At a 4.0x to 4.5x market multiple, that gap supports a purchase price of $2.39M to $2.69M, which is $510K to $810K below the $3.2M ask. That is what a $6,997 report found on a fictional deal sized like a real one.
What the analysis caught
A "one-time" repair that happened three years running. The seller added back $68K of equipment repair as non-recurring. The general ledger showed similar charges of $61K and $58K in the two prior years. Recurring, and removed.
A related-party fee the tax returns quietly disowned. A $62K annual consulting fee paid to the owner's brother sat on the P&L both years ... and appeared on the federal tax returns in neither. When the seller's own tax preparer won't treat an expense as legitimate, neither will we.
A payroll number that didn't reconcile. P&L payroll expense exceeded W-2 filings by $28K, a variance that grew year over year with no explanation from management. Deducted from normalized EBITDA pending resolution, with the exact reconciliation question handed to the buyer to put to the seller.
39% of revenue in one contract with a 90-day out. A single commercial customer, a contract expiring months after a likely close, a termination-for-convenience clause, and an assignment that requires written consent. The report converts that into closing conditions and an earnout structure.
A working capital peg the LOI balance sheet would have hidden. The December balance sheet showed healthy working capital. The 13-month trend showed that number was year-end timing, not operating reality, and produced a $206K seasonality-adjusted peg for the purchase agreement.
What's inside the report
Thirteen sections, each tied to general ledger source data: an executive summary with a deal verdict, the normalized EBITDA bridge, a recast P&L, the addback schedule with each item ruled valid, questionable, or invalid, revenue quality and disaggregation, the working capital peg, a net debt schedule, cash proof against bank statements, book-to-tax reconciliation, payroll reconciliation, an accounting policy review, AR/AP aging, a severity-rated risk assessment, and priority questions for the seller. A supporting Excel workbook with the underlying monthly detail accompanies every engagement.
A note on what you're reading: Alpine Air HVAC does not exist, and every figure is illustrative. Real client reports are strictly confidential and never shared. The fictional numbers are the only difference between this document and the one that lands in your inbox.
What this costs on a real deal
This sample is the Standard QoE tier: $6,997, delivered in 8 to 10 business days. It sits between a $1,999 QoE Lite for smaller or cleaner deals and a $15,000 Comprehensive engagement for larger or more complex targets. Full tier details are on the order page, and if you're weighing the cost against the market, read how much a QoE costs for a lower middle market deal.
One way to read the sample as a buying decision: The fictional buyer paid $6,997 and walked away with documented grounds for a price reduction of half a million dollars or more. The math on real deals tends to rhyme.
Frequently asked questions
What does a QoE report look like?
A Standard Quality of Earnings report is typically a 15-25 page document organized around an executive summary with a deal verdict, a normalized EBITDA bridge, a recast P&L, an addback-by-addback assessment, revenue quality and concentration analysis, a working capital peg, a net debt schedule, cash proof, book-to-tax and payroll reconciliations, an accounting policy review, a risk assessment, and a list of priority questions for the seller. QoEPro publishes a complete sample report on a fictional HVAC company so buyers can see the full deliverable before ordering.
What is included in a QoE report?
A QoE report includes a normalized EBITDA figure with a bridge from the seller's stated number, an assessment of each claimed addback as valid, questionable, or invalid, revenue disaggregation and customer concentration analysis, a recommended working capital peg, a net debt schedule, cash proof against bank statements, reconciliations to tax returns and payroll filings, and a risk assessment with recommended deal protections. QoEPro reports also include a supporting Excel workbook with the underlying calculations.
How long is a QoE report?
Report length scales with scope. A focused review may run 8-12 pages, a Standard QoE typically runs 15-25 pages plus a supporting Excel workbook, and a full institutional engagement can exceed 40 pages. Length matters less than traceability: each adjustment should tie to a general ledger account and supporting documentation.
Is the QoEPro sample report based on a real company?
No. The sample report covers Alpine Air HVAC, a fictional company, and every figure in it is illustrative. The structure, analysis, and rigor are identical to a real QoEPro Standard QoE engagement. Real client reports are strictly confidential and are never published or shared.
Do I get the underlying Excel workbook with a QoE?
Yes. Every QoEPro engagement is delivered with a supporting Excel workbook containing the source calculations, monthly data tables, working capital analysis, and EBITDA bridge detail. The workbook is considered an integral part of the report.
QoEPro performs independent Quality of Earnings reviews for buyers and sellers in the lower middle market, from independent sponsors and search fund entrepreneurs to owners preparing for a sale. Our job isn't only to verify the numbers. It's to help buyers understand whether the business they're acquiring performs the way it's been presented. View report options →