You are about to buy someone else's numbers. Buy the business, not the story.
Every figure in a broker packet was prepared by the party being paid at closing. Not dishonestly, usually, but optimistically and without anyone testing it against an independent source. Buy-side diligence is how you find out which parts hold up, before the wire goes out.
Self-funded searchers
Screen dozens of targets on the same evidence standard instead of trusting a broker packet until the one deal you can afford to diligence properly.
Screening breadth
Independent sponsors and small PE
Run first-pass diligence in house. Use the workbook as the base of your analysis and bring specialists in only where the findings say you need them.
In-house first pass
What the packet says, and what it actually means
None of these are red flags on their own. They are the four places where a reasonable looking number and a defensible one come apart.
Adjusted EBITDA, per the seller
A schedule of add-backs assembled by the party being paid. Every one of them needs evidence before it can carry a multiple.
Revenue on the P&L
Booked revenue is not collected cash. A proof of cash shows whether the deposits actually arrived, month by month.
A clean trailing twelve months
Period-end timing, owner draws routed through expenses, and non-recurring income all sit inside a clean-looking number.
Owner benefit or SDE
Useful framing, but it is not the earnings figure a lender will underwrite, and the gap is where deals reprice.
Start with the one test the seller cannot dress up
A proof of cash reconciles what the bank recorded against what the books recorded, month by month. Books can be reconstructed. Bank statements are an independent record, which is what makes this the highest signal test available early in a process, and the reason diligence teams run it before anything else builds on the numbers.
Zenith runs it automatically from bank and accounting data on every report. If you want to see the procedure first, the free proof of cash template is the same analysis done by hand.
If you are buying with an SBA loan, the rules just changed
From October 1, 2026, coverage on an initial acquisition has to clear 1.25 to 1 on historical figures, total debt is capped at the supported valuation, and larger deals require an independent quality of earnings report commissioned by the lender. A growth plan no longer qualifies a deal that does not cover today.
That makes the arithmetic worth running before you sign an LOI rather than after. Read what changed and what triggers the requirement.
And where your lender wants reviewed work product rather than software output alone, any report can add an expert review on request: a senior analyst from the bench behind our quality of earnings engagements goes through the workbook line by line, holds a findings call with you, and issues a lender-ready summary letter.
Keep going
SBA coverage calculator
Whether a deal is financeable on last year’s numbers, in a minute.
Buy-side diligence checklist
What to request from the seller, and in what order.
Zenith vs a Big-4 engagement
Where each one is the right call, honestly drawn.
How the engine works
The full report contents, tab by tab.
Frequently asked questions
When in the process should a buyer run financial due diligence?
Earlier than most buyers do. The traditional pattern is to wait until the one deal under LOI, because a full engagement is expensive enough that you can only justify it once. Automating the analysis layer changes that calculus: you can run a real evidence-based pass on every target you are seriously considering, and reserve deep specialist work for the deal that survives.
What is the difference between a quality of earnings report and an audit?
An audit gives an opinion on whether financial statements are fairly presented under an accounting framework. A quality of earnings analysis asks a different question: how much of this reported profit is real, recurring and transferable to a new owner. Buyers need the second one, because it is the number the price and the debt are built on.
Can I run this if the seller only has QuickBooks and tax returns?
Yes. That is the normal case in this market. Zenith connects directly to QuickBooks Online or Xero, and accepts uploaded financials for businesses that are not on cloud accounting.
Does this replace hiring a diligence firm?
Not on every deal. It replaces the manual analysis layer, which is where most of the hours and most of the cost sit. For complex transactions, regulatory sign-off, or anything heading for a dispute, an advisory firm is still the right call. For the great majority of deals in the lower middle market, the workbook is the analysis.
Can I get the report reviewed by a human expert?
Yes, on request. Deals under LOI can add an expert review: a senior analyst from the bench behind our quality of earnings engagements goes through the workbook line by line, holds a findings call with you, and issues a lender-ready summary letter your bank can put in the file.
Have a target in front of you?
Send us the financials and we will show you what the analysis surfaces before you commit to a price.