Quality of Earnings for US Acquisitions: Compare Scope, Reports and Reliance

Compare three United States quality-of-earnings providers

For a US acquisition, Anders and HCVT publish buyer-side services; Eide Bailly’s cited offer is oriented to seller preparation. Match the transaction side before comparing scope or turnaround.[1][3][4]

A quality-of-earnings review evaluates whether transaction earnings are sustainable, repeatable, and cash-generating.[3] Unlike a financial-statement audit, it is transaction-focused and does not issue an audit opinion.[1][4]

Eide Bailly

• Transaction side: Eide Bailly presents its service as a sell-side QoE and advisory process.[1]
• EBITDA and working capital: Its scope includes a reported-to-adjusted EBITDA bridge, add-backs, financial trends, segmented revenue and margins, expenses, employees, balance-sheet matters, and normalized working capital.[1]
• Timing or limitations: Eide Bailly reports 4–6 weeks from engagement to a draft report, depending on complexity, document availability, and analytical depth.[1]

Anders

• Transaction side: Anders addresses buyers validating sustainable earnings and sellers preparing for buyer diligence.[3]
• EBITDA and working capital: Its coverage includes EBITDA normalization, revenue quality, customer concentration, working-capital trends, debt-like items, cash flow, and proof of cash.[3]
• Timing or limitations: The cited page publishes neither a delivery range nor an engagement-specific independence limit; it also says its educational material is provided “as is” and does not create a professional relationship.[3]

HCVT

• Transaction side: HCVT performs buy-side and sell-side QoE analyses.[4]
• EBITDA and working capital: Its scope includes normalized EBITDA, working capital, revenue and profitability trends, debt-like items, customer and vendor concentration, accounting policies, and internal controls.[4]
• Timing or limitations: HCVT reports 3–6 weeks for most projects, depending on complexity and internal-team responsiveness. It says it will not serve both sides of the same transaction.[4]

The published timelines are not directly equivalent: Eide Bailly’s 4–6 weeks runs to a draft report, while HCVT describes 3–6 weeks for most projects.[1][4] Ask each provider to define the delivery endpoint before comparing schedules.

Evaluate adjusted EBITDA and working capital together

Compare adjusted earnings with working-capital requirements and cash conversion. HCVT describes normalized EBITDA as a transaction measure rather than a U.S. GAAP measure, and Anders includes working-capital trends and proof of cash in its discussion.[3][4]

Ask the report to distinguish management-proposed adjustments, diligence adjustments and forecast or pro forma assumptions. Require a record of supporting documents and unresolved challenges. This is a proposed reporting requirement, rather than a claim that every provider uses the same classifications.

Potential adjustments include one-time professional, restructuring, legal, or advisory fees; owner expenses or excess compensation; settlement or disposal items; cut-off differences; out-of-period entries; and revenue recorded before collection.[3][4] Because reasonable professionals may reach different conclusions, compare the evidence and classification behind each adjustment rather than relying on headline adjusted EBITDA.

HCVT’s scope includes normalized working capital and debt-like items.[4] Ask the team to set out the agreed definitions, test receivables, inventory and payables where relevant, explain seasonality and show how the closing target was derived. Do not treat a standard current-assets-minus-current-liabilities formula as the final transaction definition; the purchase agreement and professional advice must settle the actual included and excluded balances.

Anders identifies proof of cash as a diligence procedure.[3] Ask the provider which records it reconciles, which periods it tests and what unexplained differences it reports. Keep these agreed procedures separate from an audit opinion.[1][4]

Use the same scope for every proposal

A common request for proposal makes provider scopes and quotes easier to compare. Include:

• EBITDA bridge: A reported-to-adjusted EBITDA reconciliation covering add-backs, monthly and annual trends, segmented revenue and margins, operating expenses, employee costs, and balance-sheet findings.[1]
• Earnings-quality testing: Analysis of revenue recognition, customer and vendor concentration, debt-like items, accounting-policy consistency, cash flow, internal controls, and proof of cash where relevant.[3][4]
• Working-capital analysis: Review of receivables, inventory, payables, seasonality, cut-off practices, unusual movements, and factoring or other financing arrangements.

Specify the entities and historical periods to be covered, the expected report format, and whether the provider will support negotiations over EBITDA adjustments or the working-capital target.

Prepare records before fieldwork

Commonly requested records include financial statements, general-ledger or trial-balance data, tax returns, customer and other key contracts, accounts-receivable and accounts-payable reports, payroll records, revenue schedules, bank reconciliations, management reports, and supporting operational data.[1][4] Eide Bailly recommends appointing one internal contact to coordinate requests and confidentiality.[1]

Eide Bailly’s published workflow moves from consultation and information gathering through initial analysis, deeper investigation, discussion of initial findings, finalization after feedback, and possible follow-up support.[1] Use that sequence as a planning framework, but obtain provider-specific dates for data-room readiness, management interviews, initial findings, draft delivery, comment resolution, and the final report.

Choose according to transaction side and risk

• Seller preparation: Consider Eide Bailly, Anders, or HCVT because each expressly addresses sell-side work.[1][3][4] Eide Bailly may suit a seller seeking its staged process and published 4–6-week timeline to a draft report.[1]
• United States buyer diligence: Anders and HCVT describe scopes covering normalized EBITDA, working capital, and other transaction risks.[3][4] Anders expressly includes proof of cash, while HCVT publishes a 3–6-week project range and a policy against serving both sides of the same transaction.[3][4]

What to confirm with each provider

The cited pages do not publish fee schedules, minimum fees, hourly rates, retainers, expense treatment, separate working-capital charges, payment schedules, cancellation or refund terms, complete engagement-letter provisions, formal deal-size eligibility thresholds, or independent comparative performance data.[1][3][4]

Request an itemized quote and draft engagement letter from each shortlisted provider. Ask the proposal to separate:

• the base quality-of-earnings report;
• normalized working-capital analysis and target support;
• proof-of-cash procedures;
• tax, technology, industry, or other specialist involvement;
• travel, data-room, data-processing, and similar costs;
• management calls, report revisions, and post-delivery support; and
• hourly or fixed charges triggered by scope changes.

Before signing, confirm the contracting entity, engagement-team location, covered entities and periods, applicable reporting framework, required records, conflict clearance, data assumptions, exclusions, draft and final dates, confidentiality and data-handling terms, and the process for approving scope changes. Also obtain written confirmation that the provider accepts the company’s industry, geography, revenue, EBITDA, and transaction size.

Set report use and reliance before fieldwork

Name the commissioning party, intended users and decisions the report is meant to inform. Ask whether the buyer may share it with lenders, investors, counsel and other advisers, and whether those parties receive reliance rights or only permission to read it. Obtain the actual restrictions, consent process, liability terms and permitted onward disclosure in the engagement letter; a downloadable report does not itself establish third-party reliance.

Specify confidentiality, data-room permissions, personal-data handling and retention. Require a final signed or otherwise formally issued report after management comments are resolved, with unresolved data gaps identified. Agree who can change the scope, who pays for follow-up questions and which draft versions must not circulate as final findings. These are requested contract safeguards; the public service pages do not settle them.

References

1. Understanding Quality of Earnings When Selling a Business (eidebailly.com, 2026)
3. Quality of Earnings (QoE) Report: What It Is (and Why It Matters in M&A) – Anders (anderscpa.com, 2026)
4. Quality of Earnings Analysis | HCVT: Holthouse Carlin & Van Trigt LLP (hcvt.com)