A quality of earnings (QoE) report for a lower-middle-market private company typically costs somewhere between $5,000 and $100,000 or more, and most companies under $10 million in revenue with reasonably simple books pay in the $10,000 to $20,000 range for a standard sell-side report. The number moves a lot from deal to deal because a QoE engagement is priced like most professional-services work: by scope and hours, not by a fixed schedule tied to purchase price. A one-location company with clean, accrual-basis books and a single legal entity sits at the low end; a multi-entity, multi-state business with messy records sits at the high end, sometimes well past six figures.
This article breaks the cost down by deal size, sell-side versus buy-side, full versus limited scope, what specifically drives the price up, how long the work takes, who actually performs it, and what shows up in the final deliverable. Figures below are drawn from published guidance from M&A advisory and transaction-advisory sources rather than invented averages, and are labeled as such — treat them as an educational range, not a quote for your specific business.
What a Quality of Earnings Report Costs
A quality of earnings report is a narrower, deal-focused cousin of an audit: an accountant’s independent study of whether a company’s reported EBITDA reflects the sustainable, ongoing earning power of the business, built for a buyer, lender, or seller making a pricing decision rather than for regulatory compliance. Because the work is scoped rather than standardized, published pricing tends to come as a range with named cost drivers attached, not a rate card. One lower-middle-market M&A advisory firm that publishes its own fee guidance puts the spread at $5,000 at the low end for a minimal report on a small company, up to more than $100,000 for a complete report on a mid-sized company — and notes that businesses under $10 million in revenue with relatively simple operations can often get a report from a local firm for $10,000 to $20,000.
| Company profile / report scope | Reported cost range | Typical provider |
|---|---|---|
| Small company, straightforward books, limited/minimal-scope report | Around $5,000 and up | Local CPA or small boutique |
| Under $10M revenue, relatively simple operations, standard sell-side report | $10,000 – $20,000 | Local firm |
| $10M – $25M+ revenue, or a private-equity buyer involved | Above the small-company range; PE buyers commonly expect a well-known regional firm | Regional or super-regional firm |
| Mid-sized company, complete/full-scope report, more complex operations | $100,000+ at the high end | Regional or larger transaction-advisory firm |
| Refresh of an existing report closer to a go-to-market date | Less than the cost of the original engagement | Same provider, updated scope |
Two things are worth taking from that table. First, the range is genuinely wide — a five-figure difference between the low and high end within the same size bracket is normal, because scope and firm size move the number as much as revenue does. Second, cost is not the only variable that scales with size: private equity buyers and their lenders generally expect a recognizable regional or national firm’s name on the report once a company is in the $10 million to $25 million revenue range and above, which pushes the fee up independent of how clean the books are. This is a general educational range based on published guidance from firms serving the lower middle market, not a quote — get engagement-specific proposals from two or three providers before budgeting.
Sell-Side vs. Buy-Side: Who Pays, and Does It Cost the Same
A QoE report is labeled by who commissions it, not by what it contains — the analytical work is broadly similar either way. The commercial terms differ:
- Sell-side QoE. The seller pays. Because a credible sell-side report tends to support a smoother process and a stronger negotiating position, the fee is generally treated as an investment that pays for itself rather than a pure cost. Sell-side work is increasingly standard practice — buyer due diligence moves faster when the seller has already assembled and tested its own numbers.
- Buy-side QoE. The buyer pays, since the buyer is the party commissioning the analysis to validate the price it is offering. On larger transactions, some buyers ask the seller to absorb part of the fee — commonly framed as splitting it — particularly if the seller’s financial statements should have been audited along the way but never were. A firm representing both the buyer and the seller on the same deal creates an obvious conflict of interest, so buy-side and sell-side reports are performed by separate providers even when both exist on the same transaction.
Sellers sometimes assume a sell-side report is optional because the buyer will run its own QoE anyway. In practice, the two reports serve different interests: a buyer’s diligence team has no incentive to surface add-backs that would raise the price it pays, while a seller’s own QoE provider is far more likely to identify supportable adjustments that increase EBITDA. Skipping the sell-side version does not eliminate the cost of financial due diligence — it just means the seller has no say in how the numbers get framed before the buyer’s team does. A well-supported sell-side report can also translate into softer downstream terms: fewer contingent payments, a more favorable working capital target, and, in deals that use representations and warranties insurance, a stronger diligence record already assembled for the insurer’s underwriters to review.
Full-Scope vs. Limited-Scope Reports
Not every QoE engagement covers the same ground, and scope is one of the biggest levers on price.
- Limited or minimal-scope reports focus narrowly on the core question — typically normalized EBITDA and a proof-of-revenue tie-out to bank statements — and skip deeper analytical work like customer-level revenue segmentation, detailed working capital trend analysis, or multi-year balance sheet scrutiny. These sit at the low end of the published range and suit very small, simple businesses or early-stage sell-side prep where the owner wants a first read on issues before committing to a full engagement.
- Full or complete-scope reports add the analytical depth institutional buyers and their lenders expect: a normalized EBITDA build with detailed add-back support, revenue and margin analysis broken out by customer, product, channel, and location, a working capital trend study, balance sheet quality review, and often a look at debt-like items and related-party transactions. These sit at the high end of the range and are what most buyers mean when they say QoE in a formal process.
Scope is negotiable, and it is common to start with a narrower engagement and expand it — for example, a seller might commission a lighter report a year before going to market to find and fix problems early, then pay for a fuller refresh (at a lower incremental cost than the original) once the company is ready to launch a sale process.
What Drives the Cost Up
Beyond company size, several specific factors push a QoE engagement toward the top of its range. A provider quoting a fee is really pricing the number of hours it expects to spend, so anything that adds analytical complexity adds cost:
- Multiple legal entities. Consolidating and reconciling financials across several entities — common for businesses that grew by acquisition, or that separate real estate or equipment into affiliated companies — multiplies the reconciliation work.
- Multi-state operations. Businesses operating, employing, or selling across several states typically carry more complex tax and compliance questions for the diligence team to work through alongside the core earnings analysis.
- Cash-basis or non-GAAP bookkeeping. How closely the financials already adhere to GAAP is a directly cited cost driver — books kept on a cash or hybrid basis need to be converted and tested before the analyst can even start on adjustments, which adds time that clean accrual-basis records don’t require.
- Inventory. Whether the business carries inventory is called out specifically as a complexity factor, since inventory valuation, costing methods, and obsolescence all need separate testing.
- Carve-outs. When the entity being sold is a division, product line, or subsidiary of a larger business rather than a standalone company, the diligence team has to separate out standalone financials, allocate shared costs, and build a clean pro forma — materially more work than analyzing an already-standalone company.
- How clean the records already are. Disorganized bookkeeping, unreconciled accounts, or missing documentation slow the process regardless of the other factors, and time is what the fee is built on.
- Firm size. Published guidance from an M&A advisory firm notes that a small-to-mid-sized firm’s fee structure tends to be built around middle-market engagements, generally pricing more favorably than a larger national accounting firm would for the same scope of work.
Owners who want to hold the cost down have real leverage over most of this list before they ever talk to a QoE provider: cleaning up financials before a sale, consolidating unnecessary entities, and moving off cash-basis bookkeeping in advance all shrink the scope — and therefore the fee — of the eventual engagement.
How Long a QoE Report Takes
Published guidance from an M&A advisory firm puts typical turnaround at 30 to 45 days, depending heavily on how quickly the owner or management team can supply requested information and respond to follow-up questions — the analyst’s calendar time is often gated by the seller’s response time, not the analyst’s workload. A separate industry commentary on sell-side QoE work describes the process as typically taking a few weeks, which is broadly consistent with the lower end of that range for a narrower-scope engagement. Sellers who commission a sell-side report while their investment banker or advisor is already running the sale process can often complete the QoE concurrently, which avoids the report becoming a bottleneck after a letter of intent is signed.
Who Performs Quality of Earnings Reports
QoE work is performed by CPA firms and specialized financial due diligence firms — it does not have to be a licensed CPA doing the analysis, unlike an audit. Published guidance groups providers roughly into three tiers in the lower middle market:
| Provider type | Typical fit | Cost positioning (per published guidance) |
|---|---|---|
| Local CPA firms / generalist practices | Very small companies with simple, already-clean books | Lowest cost of the group; typically the source of the $10,000–$20,000 range cited above for straightforward under-$10M engagements |
| Small-to-mid-sized firms and specialized financial due diligence (FDD) firms focused on the middle market | Lower-middle-market deals of any size where the team does transaction work as a core focus | Published guidance describes these firms’ fee structures as built around middle-market engagements, generally pricing more favorably than a larger national firm for the same scope |
| Well-known regional or larger accounting-firm advisory arms | Companies roughly $10M–$25M+ in revenue, or any deal with a private-equity buyer, where lenders and buyers expect a recognized name | Higher cost than a smaller or boutique firm for comparable scope, reflecting the brand and overhead of a larger practice |
A newer category worth knowing about is tech-enabled providers and diligence marketplaces — platforms that match sellers or buyers with vetted independent QoE professionals or standardize parts of the process with software, rather than employing analysts inside a traditional firm. Public, verifiable pricing data for this category is thinner than for traditional CPA firms, so treat any specific number you see quoted for a tech-enabled provider as a starting point for your own quotes rather than a market benchmark. Whatever provider type you use, look for a firm or team with genuine transaction experience and, ideally, a dedicated group that does nothing but QoE and financial due diligence work — generalist accountants who occasionally take on a QoE engagement tend to move slower and miss the adjustments a specialist would catch.
What You Actually Get in the Report
A QoE deliverable is typically a PDF report or a detailed spreadsheet package, not a one-page summary. The core components across most engagements include:
- Normalized (adjusted) EBITDA with a full bridge from reported earnings, documenting every add-back and adjustment individually rather than as a lump sum.
- Proof of revenue and proof of cash — a tie-out of reported revenue and cash receipts to actual bank statements, which is one of the most closely scrutinized sections since it directly tests whether reported figures are real.
- Revenue and margin analysis broken out by customer, product line, sales channel, or location, surfacing concentration or trend issues a top-line income statement would hide.
- Working capital analysis, often feeding directly into the working capital target negotiated in the purchase agreement.
- Balance sheet review, checking whether revenue, expenses, liabilities, and reserves are recorded in the correct periods.
- Detailed commentary on each analytical area, explaining the findings and their implications rather than presenting numbers alone.
An audit and a QoE report are often confused but answer different questions. An audit is an attest engagement that must be performed by a CPA and exists to confirm compliance with GAAP; a QoE report is a consulting engagement focused on whether earnings are sustainable and normal, is generally more forward-looking, and directly incorporates the kind of add-backs and adjustments an audit would not touch. Buyers do not treat a QoE report as a substitute for their own financial due diligence, but an independent, well-documented sell-side report meaningfully shapes how much diligence work the buyer’s team feels it needs to redo.
Is the Cost Worth It
The fee has to be weighed against the cost of skipping the work. Analysis of a sample of 75 lower-middle-market transactions that broke after a signed letter of intent found that EBITDA discrepancies surfaced during QoE work were the second most common cause of deal failure, at 21.3 percent of broken deals in 2025 — up sharply from 10.6 percent just two years earlier — trailing only non-QoE diligence findings, a broader category Axial defines as undisclosed legal or compliance risks, customer concentration concerns, and contract issues. In one account Axial highlights alongside that data, an independent sponsor who had spent significantly on its own QoE work found EBITDA off by roughly $265,000 to $594,000 against the figure the deal had been marketed on. Measured against a five- or six-figure QoE fee, the alternative — a deal that dies post-LOI after months of exclusivity, legal fees, and lost market momentum, or a purchase price that gets renegotiated downward once a buyer’s own diligence finds what a seller’s QoE would have caught first — is a considerably more expensive outcome. This is one reason QoE cost is worth budgeting into the broader cost of selling a business from the start rather than treating it as an optional add-on late in the process. Sell-side platforms such as Bankerly.ai build the underlying QoE-style financial package — along with the projection model, CIP, teaser, NDA, buyer matching, managed Q&A, and data room — into the standard preparation work before a company goes to market, which is one option for owners who want that preparation done as part of a single process rather than commissioned separately.
Any discussion of how a QoE report affects purchase price is an educational estimate, not a valuation or an appraisal — actual outcomes depend on the specific findings, the negotiation, deal structure, and prevailing market conditions. For questions about how a specific QoE engagement, its scope, or its findings affect your legal or tax position, confirm with your own attorney or CPA rather than relying on general guidance.
Sources
Frequently asked questions
- How much does a quality of earnings report cost?
- Published guidance from lower-middle-market M&A advisors puts the range at roughly $5,000 at the low end for a minimal report on a small company up to $100,000 or more for a complete report on a mid-sized company. Companies under $10 million in revenue with relatively simple operations commonly pay $10,000 to $20,000 for a standard local-firm report; treat these as general ranges, not a quote for your specific business.
- Who pays for a quality of earnings report, the buyer or the seller?
- It depends on who commissions it. A sell-side QoE report is always paid for by the seller, since the seller is ordering it to prepare for market. A buy-side QoE report is typically paid for by the buyer, though on larger deals some buyers ask the seller to cover part of the fee. The same firm should not represent both sides on one deal, since that creates a conflict of interest.
- How long does a quality of earnings report take?
- Most QoE engagements take 30 to 45 days from start to finish, though the actual calendar time depends heavily on how quickly the owner or management team supplies requested documents and answers follow-up questions — the analyst is often waiting on the seller more than working through a backlog. Smaller, narrower-scope reports can move faster, sometimes in a few weeks.
- What's the difference between a full-scope and limited-scope QoE report?
- A limited or minimal-scope report focuses narrowly on normalized EBITDA and a basic revenue-to-bank tie-out, and costs less. A full-scope report adds detailed customer and margin analysis, a working capital trend study, balance sheet quality review, and deeper documentation of every adjustment — the level of depth most institutional buyers and their lenders expect once a deal moves into formal diligence.
- What makes a quality of earnings report cost more?
- Cost rises with company size, but also with specific complexity factors: multiple legal entities, operations spread across several states, cash-basis or non-GAAP bookkeeping that needs conversion, inventory that requires separate valuation testing, carve-outs from a larger parent company, and how clean or disorganized the underlying records already are. Cleaning up records before engaging a provider can meaningfully shrink the eventual fee.
- Do I need a big national accounting firm for my quality of earnings report?
- Not necessarily. For companies under roughly $10 million in revenue with simple operations, a local firm typically suffices and costs less than a larger firm for the same scope of work. Once a company is in the $10 million to $25 million-plus revenue range, or a private equity buyer is involved, a well-known regional or larger firm's name generally carries more credibility with buyers and lenders.
- Is a quality of earnings report the same thing as an audit?
- No. An audit is an attest engagement performed only by a CPA to confirm the financial statements comply with GAAP, and it is backward-looking. A QoE report is a consulting engagement, doesn't have to be performed by a CPA, is more forward-looking, and directly incorporates add-backs and adjustments an audit wouldn't touch. A QoE report is also generally less expensive than a full audit.
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