How to Choose a Quality of Earnings Provider: What to Look for and What to Avoid

# How to Choose a Quality of Earnings Provider: What to Look for and What to Avoid

You've identified a business you want to buy. You're under LOI or approaching it. Your lender mentioned a Quality of Earnings report. Now you need to find someone to do it.

The problem is that quality of earnings providers range from Big 4 transaction advisory teams that charge $150K for a mid-market deal to solo CPAs who've never seen a QoE engagement. Choosing the wrong one is expensive in two ways: you pay for work that doesn't catch the issues, or you pay for a report that's far more than your deal requires.

Here's how to choose the right provider for your transaction.

The Provider Landscape

The QoE market breaks into roughly four tiers:

Big 4 and Big 4 adjacent (PwC, Deloitte, EY, KPMG, and the next tier of nationals) Designed for $50M+ deals. Their processes and pricing reflect that. For a $5M acquisition, you're getting a first-year associate running the work with a manager reviewing it periodically. The fee will be $60K–$150K. The report will be thorough and well-formatted. It's almost certainly more than you need, and the team doing your deal won't have specific lower middle market experience.

Regional and national CPA firms with transaction advisory practices These vary enormously. Some have dedicated transaction advisory teams with real QoE experience. Others have a partner who does a few deals a year and calls it a specialty. For deals in the $5M–$20M range, a strong regional firm with an active transaction practice is often the right fit. Fees typically run $20K–$50K.

Boutique QoE firms and independent transaction advisors Specialists who do nothing but QoE work. They tend to have the most relevant experience per engagement for smaller deals, faster turnaround times, and lower fees. For deals in the $1M–$15M range, this tier is often the best fit. Fees typically run $8K–$25K.

Solo CPAs and general practitioners Some are excellent. Many don't have the QoE-specific experience to know what they're looking at. A general practitioner who prepares tax returns and audits small nonprofits is not equipped to analyze the working capital dynamics of a manufacturing acquisition. Be careful here.

What to Look For

1. Active deal experience at your deal size

QoE work is a specialty. The skills that make someone a good auditor or a good tax preparer don't automatically translate to QoE work. Ask providers directly: how many QoE engagements have you completed in the last 12 months? What was the average deal size?

For a $4M acquisition, you want someone who does $2M–$10M deals regularly — not someone who does $50M deals occasionally. The dynamics are different. The accounting is less sophisticated but the risk analysis (owner dependencies, cash-basis accounting, related-party transactions) is often more nuanced.

2. CPA credentials with transaction focus

The provider running your engagement should be a licensed CPA. The CFF (Certified in Financial Forensics) and ABV (Accredited in Business Valuation) credentials are relevant indicators of transaction experience, though not required.

More important than credentials is the direct experience with buy-side QoE work specifically. Ask: do you primarily do buy-side work, or sell-side? Do you work with SBA lenders frequently? Both affect how the report is structured and what it emphasizes.

3. Turnaround time that fits your timeline

Most LOIs give buyers 45–90 days to close. QoE work typically takes 2–6 weeks depending on the complexity of the business and the quality of seller-provided documents.

Ask providers directly: what is your current availability, and what is a realistic turnaround for my deal? A 6-week turnaround when you have 45 days to close leaves no room for re-negotiation.

Bedrock delivers QoE reports in 2–4 weeks. We keep our capacity intentionally controlled so we can meet that commitment.

4. Transparent, fixed-fee pricing

QoE fees should be quoted as a fixed fee, not an hourly estimate. Hourly estimates almost always come in higher than expected once the engagement is underway. A fixed fee protects you from scope creep and lets you budget accurately.

For reference, here's a breakdown of typical QoE costs by deal size and complexity.

5. Lender acceptance

If you're using SBA financing or conventional bank financing, your lender may have a list of approved QoE providers or specific formatting requirements for the report. Ask your lender before engaging anyone.

Some SBA lenders require the QoE provider to be a CPA firm (not just an individual CPA). Some have specific report format requirements. Find out before you're 30 days into a 45-day close timeline.

6. Independent perspective

Your QoE provider should have no relationship with the seller, the seller's broker, or the seller's accountants. Independence is the point. A provider recommended by the seller's broker has a conflict of interest — even if they'd never intentionally skew the work, the appearance of independence is compromised.

Some buyers ask: can the seller and buyer share a QoE to split costs? Occasionally this works for sell-side QoE reports prepared before the deal process. For buy-side diligence, no. You want someone working exclusively for you.

Questions to Ask Before You Hire

Ask every provider you're evaluating:

1. How many QoE engagements have you completed in the past 12 months? 2. What is the typical deal size range you work in? 3. Who will actually do the work — a named senior professional or a team of associates? 4. What is your current availability and realistic turnaround for this engagement? 5. Is your fee fixed or hourly? 6. Are you on the approved provider list for [lender name]? 7. Have you worked on deals in this industry before? 8. What would be your top areas of focus for a business like this?

That last question is revealing. A provider who has genuinely thought about your deal will have a specific answer. One who hasn't will give you a generic answer about revenue and EBITDA.

Red Flags

They quote a fee before they've asked about the business. QoE fees should be based on complexity, industry, quality of books, and scope. A provider who quotes $15K before asking a single question about your deal is either very experienced at estimating quickly or is quoting a number to win the business and will revise it later.

The scope doesn't include working capital. Some cheaper QoE offerings focus only on EBITDA normalization and skip the working capital analysis. This is a meaningful gap. The working capital peg is negotiated based on QoE findings. If the QoE doesn't cover it, you're either guessing on the peg or paying for additional work later.

They've never seen a cash-basis business. Most small businesses don't keep their books on full accrual. If a provider doesn't have a specific process for converting cash-basis financials and testing revenue against bank deposits, they'll miss things.

They're too agreeable. A good QoE provider will push back on seller add-backs they don't find credible. If a provider sounds like they'll produce whatever findings make the deal work, that's not independence — that's a rubber stamp.

What Bedrock Offers

Bedrock is a CPA-led QoE firm built specifically for the $1M–$40M acquisition market. Our engagements are led by CPAs with Big 4 backgrounds (PwC, RSM) and dozens of lower middle market transactions. We are not generalists who do QoE occasionally — this is all we do.

- Fixed fees, quoted before engagement - 2–4 week turnaround - SBA lender experience across multiple markets - Full working capital analysis included in every engagement - Direct access to the CPA leading your engagement, not an associate hand-off

If you're evaluating providers for an upcoming transaction, the complete guide to Quality of Earnings reports is a good place to start — it will help you understand what the report should cover so you can evaluate what you're being offered.

Talk to us about your deal.