Senior-led Quality of Earnings diligence
Know what the earnings really are before you pay for them
Zenith provides senior-led Quality of Earnings diligence for lower middle market acquisitions. We combine experienced transaction judgment with proprietary financial analysis technology to verify earnings, challenge adjustments, and identify the issues that can change what a business is worth.
Illustrative exhibit: add-back review
FY24
Owner compensation adjustment
+$185,000
AcceptedTied to the payroll register. Replacement salary benchmarked.
Legal fees, marked one-time
+$148,000
RejectedAppeared in each of the last three fiscal years. Recurring.
Vehicle and travel
+$36,000
ReducedPersonal-use portion documented at $19,400. Remainder is operating cost.
Seller's adjusted EBITDA
$1,512,000
Verified adjusted EBITDA
$1,347,400
$164,600 of claimed earnings did not survive review. At an illustrative 3.8x multiple, that is approximately $625,000 of purchase price.
Who does the work
Transaction professionals, not a junior analyst factory
Every Zenith engagement is staffed by experienced finance professionals drawn from investment banking, investing, consulting, and corporate finance backgrounds. The bench includes CFAs, ex-investment bankers, and former McKinsey management consultants.
Our technology handles the repetitive reconciliation and data-processing layer. Our professionals handle the questions that require judgment.
800+
Transactions overseen across the team
$500K–$100M
Transaction sizes represented
Senior-led
Analysis, review, and findings discussion
What you are actually buying
A QoE should change the deal when the facts warrant it
The report is a deliverable. The value is a better decision made before the risk and purchase price become yours.
01
Confidence
Know whether the EBITDA supporting your purchase price is actually there and likely to remain after close.
02
Negotiating leverage
Turn unsupported add-backs and financial inconsistencies into specific, quantified negotiation points.
03
Downside protection
Identify concentration, working-capital, cash-conversion, and accounting risks before they become your problems.
04
Decision clarity
Know which findings should change price, alter the structure, require protection, or end the deal.
What we analyze
The financial questions your transaction rests on
We organize the work around the decisions the evidence needs to support, not a list of schedules assembled because a template called for them.
Are the earnings real?
We rebuild reported earnings, reconcile revenue to cash, and show the bridge from reported to adjusted EBITDA.
Will they continue?
We examine revenue quality, customer concentration, retention, seasonality, pricing, volume, and margin behavior.
Are the adjustments defensible?
Every seller add-back is accepted, reduced, or rejected, with the source evidence and economic rationale beside it.
What else changes the economics?
We identify macro-economic factors specific to the business's geolocation, as well as working-capital, debt-like, balance-sheet, cash-conversion, and other transaction risks that can move value.
How can you defend the conclusion?
The written report arrives with the complete Excel workbook, supporting schedules, and evidence trail behind it. If you have any questions, you can be on the phone with one of our experts within 24 hours.
Technology-enabled. Judgment-led.
Better technology means more time spent thinking about your deal
Traditional diligence consumes enormous amounts of analyst time collecting, normalizing, reconciling, and reformatting financial data. Zenith built proprietary infrastructure to handle much of that mechanical layer consistently.
Proprietary technology handles
- Accounting-data ingestion
- Ledger normalization
- Bank-to-books reconciliation
- Systematic transaction analysis
- Schedule generation
- Cross-checking across source files
Experienced professionals focus on
- Management and owner interviews
- Add-back verification
- Earnings sustainability
- Anomalies and conflicting evidence
- Customer and revenue risk
- Working capital and deal implications
We did not build technology to replace financial judgment. We built it to give our professionals more time to exercise it.
Finding to economic impact
Analysis matters when it changes what you do next
Each illustrative example follows the same discipline: identify the claim, test it against evidence, make a judgment, and quantify the transaction consequence.
$85k unsupported add-back
Evidence
No source support; expense recurs in the ledger
Verdict
Rejected
Deal impact
$382,500 potential purchase-price impact at 4.5x
Customer represents 31% of revenue
Evidence
Renewal due 60 days after closing
Verdict
High transaction risk
Deal impact
Structure, retention, and closing protection required
Seller working-capital proposal
Evidence
Normalized requirement is $240k higher
Verdict
Peg understated
Deal impact
$240,000 potential closing-economics impact
The deliverable
Every number shows its work
You receive a written Quality of Earnings report and the complete Excel workbook behind it: every reconciliation, supporting schedule, adjustment, and flagged transaction. Nothing arrives as a conclusion you have to take on faith.
Inspect the sample QoEDelivered together
Written report
Executive conclusions, adjusted EBITDA, add-back verdicts, cash proof, material findings, transaction risks, and recommended next steps.
Full workbook
The underlying model, monthly schedules, source ties, calculations, and evidence trail for your lender, accountant, and deal team to inspect.
Quality of Earnings engagements
Professional diligence, scoped to the transaction
Most lower middle market engagements fall between $6,500 and $12,500. We agree a fixed fee and delivery date before kickoff, with no hourly billing or surprise invoices. Entity count, data quality, lender requirements, and transaction complexity determine the final scope.
Core Quality of Earnings
For lower middle market acquisitions where the buyer needs to establish sustainable EBITDA before closing.
Starting at
$6,500
- Management or owner interview
- Adjusted EBITDA analysis and add-back verification
- Monthly financial trend analysis
- Proof of cash
- Revenue quality and concentration where data permits
- Findings log with severity and dollar impact
- PDF QoE report and supporting Excel workbook
- Findings walkthrough and post-report transaction support
Lender and SBA scope available
Comprehensive / Lender QoE
For larger, multi-entity, lender-driven, SBA, or otherwise complex transactions requiring a broader diligence file.
Starting at
$9,800
- Everything in the Core engagement
- Bank-to-books-to-tax-return reconciliation
- Working-capital analysis with a recommended peg
- Balance-sheet and debt-like item review
- Expanded revenue quality and customer analysis
- Additional management diligence
- SBA SOP 50 10 8.1 Appendix 15 scope where applicable
- Expanded support through underwriting and negotiation
Not under LOI yet?
Pre-LOI financial screen
If you are still deciding whether a deal deserves full diligence, we offer a lightweight review of the CIM or seller financials. It is a screen, not a QoE or a lender deliverable.
$299 · 2 business days
Ask about pre-LOI screeningPrefer to perform the diligence yourself?
Financial Due Diligence platform
Our separate software platform automates the financial analysis layer for investors and advisors who have the expertise and capacity to make their own transaction judgments.
Explore Financial Due DiligenceBuying with an SBA loan? A QoE may no longer be optional.
From October 1, 2026, SOP 50 10 8.1 requires an independent Quality of Earnings report on SBA change-of-ownership deals at or above three million dollars. The required report includes a cash proof reconciling bank statements to the books and filed tax returns.
On those deals the SOP requires the lender to commission the report, so we work directly under the lender's engagement. For the thresholds, exemptions, and scope, read our plain-English breakdown of the SBA QoE requirement.
The engagement
A direct path from source data to transaction decision
01
Scope and collect
We agree the questions, entities, periods, fee, and delivery date, then collect the records through a secure request process.
02
Analyze and interview
Our technology processes and cross-checks the data while our team investigates anomalies and interviews management.
03
Form the findings
We test adjustments, determine sustainable earnings, quantify transaction risks, and complete senior review.
04
Walk through and support
You receive the report and full workbook together, followed by a findings discussion and support through negotiation or underwriting.
Evaluate the work
See what a Zenith QoE looks like
Do not choose a diligence provider from a marketing page alone. Review an annotated sample report and see how we analyze earnings, challenge adjustments, document evidence, and present findings.
Frequently asked questions
Who actually performs my Quality of Earnings analysis?
Every engagement is staffed by experienced finance professionals drawn from investment banking, investing, consulting, and corporate finance backgrounds. Our bench includes CFAs, former investment bankers, and former McKinsey management consultants with more than 800 transactions overseen across the team. The analyst who performs the work participates in the findings discussion, and every file goes through senior review and quality assurance.
How does Zenith use technology in a QoE?
Our proprietary diligence technology handles accounting-data ingestion, normalization, reconciliation, schedule generation, and systematic cross-checking. That gives our professionals more time to interview management, investigate anomalies, challenge adjustments, assess sustainable earnings, and determine what the findings mean for the transaction. Technology improves consistency and analyst leverage; it does not replace professional judgment.
Why should I not just use QoE software?
Software is excellent at organizing and analyzing financial data. It cannot interview an owner, challenge the economic rationale for an adjustment, resolve conflicting explanations, or tell you which findings should change the terms of a transaction. For financially sophisticated buyers who want to make those judgments themselves, Zenith offers a separate Financial Due Diligence platform. A Zenith QoE combines that analytical infrastructure with professional judgment and an independent written conclusion.
What do you need from us to start?
We typically work directly with the seller to collect monthly profit and loss statements and balance sheets, bank statements for every operating account, filed tax returns, and supporting detail. Exports from QuickBooks, Xero, or a broker data room all work. We send a secure upload link at kickoff and confirm when the data set is complete.
How long does it take?
Most Core engagements are completed in roughly one to two weeks from complete data, while larger, multi-entity, lender-driven, or SBA engagements may require additional time for interviews with key staff. The delivery date and scope are agreed before kickoff. If the quality or completeness of the data changes the timeline, you hear about it early rather than at the deadline.
What is the difference between Core and Comprehensive?
Core establishes sustainable EBITDA, tests adjustments, proves cash, and identifies the findings most likely to change the transaction. Comprehensive adds tax-return reconciliation, working-capital analysis, balance-sheet and debt-like item review, deeper revenue analysis, additional management diligence, and lender or SBA scope where applicable.
Does your involvement end when the report lands?
No. You receive a walkthrough of the findings while the analysis is fresh, and we remain available as those findings move into negotiation or underwriting. Unsupported add-backs and other issues often draw seller pushback after delivery, so transaction support is part of the engagement rather than an afterthought.
Do you work buy-side or sell-side?
Both, to the same evidentiary standard. A buy-side report establishes what the earnings really are before a buyer pays for them. A sell-side report identifies issues before a buyer diligence team does, while there is still time to correct, document, or explain them. The analytical standard does not change based on who engages us.
Will my lender accept the report?
The report is independent, evidence-cited, and scoped around the questions credit committees ask. On SBA deals at or above three million dollars, the applicable SOP requires the lender to commission the QoE, so we work directly under the lender engagement on those transactions. Have your lender contact us before kickoff so the scope is agreed correctly.
What size deals do you cover?
We serve lower middle market acquisitions from roughly five hundred thousand to one hundred million dollars in purchase price. Scope and pricing vary with entity count, data quality, reporting complexity, lender requirements, and the depth of transaction analysis needed.
Have a deal in diligence?
Tell us what you are buying, where the deal stands, and what the financials look like. We will recommend a scope, fixed fee, and delivery date before you commit.