The Importance of a Quality of Earnings Report During Due Diligence — Transaction Talk

Entering into a business transaction requires full disclosure, and a Quality of Earnings Report provides the perfect opportunity to bring everything to light. Matthew Allison is a Partner at Citrin Cooperman's Tax Practice, and he joins us to talk about the importance of a Quality of Earnings Report in due diligence during a business sale transaction. We kick off our conversation by defining what a Quality of Earnings Report is and how its directive differs on the buy- and sell-side. Diving into the details, we consider how a thorough consideration of information improves relationships and how sellers can embrace a realistic mindset during the research period. Next, we discuss the impact of Quality of Earnings on sales price and how pre-exposure can increase buyer comfort level when entering into a transaction. Lastly, we get into the importance of bringing everything to light during the reporting period and presenting it with transparency. Thanks for tuning in.

Key Points From This Episode:

Matt Allison's broad experience in business growth, transition planning, operational finance, and more.
What a Quality of Earnings Report is.
The two very different directives of a Quality of Earnings Report for buyers and sellers.
Information sellers should ask their CPAs or Brokers to prioritize.
Having a realistic mindset leading up to a sale.
Embracing the opportunity to examine everything during the research period.
Examples of how Quality of Earnings can impact the sales price.
Taking advantage of the opportunity to expose everything on the sales side.

Tip of the Day: Bad news doesn't get better with age. There is no sense in trying to hold anything back when there is going to be significant scrutiny on everything. Hand over everything — there's no reason to keep anything hidden.

Links Mentioned in Today's Episode:

Matt Allison on LinkedIn

Matt Allison Email

Citrin Cooperman

Transaction Talk

Disclaimer:

The material on this site may be considered advertising under the rules of the Supreme Judicial Court of Massachusetts. This site is solely for informational purposes and provides general information only. Nothing on this site should be construed as legal advice or consultation either generally or in a particular case. Neither the receipt nor the distribution of materials constitutes the formation of an attorney-client relationship.