In mid-market corporate transactions, standard statutory audits are insufficient for uncovering the true economic drivers of a business. Our Quality of Earnings (QofE) practice delivers rigorous, independent financial due diligence that goes beneath surface-level accounting to analyze the sustainability, repeatability, and transparency of historical cash flows for both corporate buyers and sell-side principals.

We perform deep financial forensic underwriting to calculate an unvarnished, normalized EBITDA baseline. This includes identifying and adjusting for non-recurring operational anomalies, accounting method inconsistencies, related-party transactions, and aggressive revenue recognition patterns. By scrubbing the underlying data, we isolate the true run-rate profitability of the target enterprise, giving investment committees and lenders absolute clarity before capital deployment.

A critical component of our analysis involves mapping working capital trends over a trailing 12-month window. We rigorously evaluate inventory velocity, accounts receivable aging, and structural cash cycles to validate and negotiate a fair Net Working Capital (NWC) peg boundary. This comprehensive diagnostic structure ensures that target asset boundaries are fully protected, eliminating the risk of post-LOI retrading and providing total execution confidence at closing.