A predictive read on what a sell-side Quality of Earnings examination will flag — produced before the QofE is commissioned.
Sell-side Quality of Earnings examinations follow a methodology. The examination surfaces a defined set of adjustment categories — owner add-backs, one-time items, run-rate normalizations, working capital seasonality, revenue recognition variances, related-party items, accounting policy consistency. Operators commissioning a sell-side QofE 6–18 months before process see these adjustments for the first time during the engagement — and react. This instrument runs the same examination methodology in advance, calibrated to patterns observed across institutional deal flow in the lower middle market. The output is a predictive estimate of the adjustments a sell-side QofE will surface — with quantified ranges, defensibility analysis, and remediation timing. It is not a substitute for a commissioned QofE. It is the institutional read an operator would want 6–18 months before commissioning one.
This is a predictive directional read. It is not a substitute for a commissioned Quality of Earnings examination. Actual QofE outcomes may vary based on examination scope, provider methodology, and additional factors not captured in this instrument.
This instrument involves detailed financial input — confidentiality is institutional. Your responses are held under formal confidentiality protocols and accessible only to TEOL principals.
The QofE Pre-Read applies TEOL Capital's predictive methodology to estimate what a sell-side Quality of Earnings examination will surface across six standardized adjustment categories. The methodology mirrors what QofE providers actually execute before the examination is commissioned.
EBITDA Normalization measures predicted adjustments from owner add-back rejection, one-time item normalization, and non-recurring expense category review. Predicted adjustment magnitude is calibrated to documentation defensibility per category.
Revenue Quality and Recognition measures predicted adjustments from revenue recognition policy variance, material revenue event normalization, deferred revenue treatment, and customer credit pattern analysis.
Working Capital Normalization measures predicted EBITDA impact from working capital methodology variance, seasonality documentation gaps, non-operating items, and growth normalization absence.
Accounting Policy and Consistency measures predicted adjustments from accounting method inconsistency, accrual discipline gaps, policy changes in lookback period, and audit or review quality trajectory.
Related-Party and Off-Balance-Sheet measures predicted adjustments from undocumented related-party transactions, owner-related real estate, off-balance-sheet commitments, and contingent liabilities.
Run-Rate and Pro-Forma Defensibility measures predicted adjustments from material events requiring run-rate normalization, pro-forma documentation gaps, forward-looking normalizations, and synergy or cost action documentation.
Per-category predicted adjustment range (low, mid, high) calibrated to defensibility scoring across 24 input questions. Composite Defensibility Score (0–100) maps to band placement: Significant Adjustment Risk (0–25, predicted 12 to 25 percent EBITDA adjustment), Material Adjustment Risk (26–50, 6 to 12 percent), Moderate Adjustment Risk (51–75, 2 to 6 percent), Institutional Defensibility (76–100, 0 to 2 percent).
This is a predictive directional read. It is not a substitute for a commissioned Quality of Earnings examination. Actual QofE outcomes may vary based on examination scope, provider methodology, and additional factors not captured in this instrument.
Calibrated to observed sell-side QofE engagements across $20 to $100M revenue businesses in the past 36 months.