How Much Does A QoE Report Cost?

How Much Does a Quality of Earnings Report Cost? A Realistic Breakdown of QOE Pricing.

If you’re preparing to sell a business, raise capital, or acquire another company, you’ve probably encountered the term “Quality of Earnings” (QoE) report. You may have also discovered that pricing estimates are all over the place, with several sources giving a range that doesn’t exactly narrow it down. A typical answer may be anywhere from 10k to 150k, but these are vastly different amounts.

So what does a QoE report cost, realistically?

The honest answer truly is ‘it depends’. There’s no avoiding that every business is different with unique complexities that may increase the cost of a service. So, what you can do is understand what those factors may be that cause pricing increases.

This article breaks down the factors that drive QoE pricing and provides realistic examples of what different types of companies might expect to pay.

Typical QoE Report Cost Range

Most middle-market businesses can expect a Quality of Earnings engagement to cost somewhere between:

$20,000 to $100,000

For very small businesses, costs may fall below this range. For large private equity-backed companies, multi-location organizations, or businesses with complex operations, costs can exceed $250,000. The key question isn’t simply revenue size. Two companies generating the same revenue may require vastly different levels of diligence.

What Are You Paying For?

A Quality of Earnings report is far more than a review of financial statements. The goal is to determine whether reported earnings accurately reflect the ongoing earning power of the business.

A QoE team typically analyzes:

• Revenue recognition practices
• Customer concentration
• Historical financial performance
• One-time or non-recurring expenses
• Owner-related expenses
• Working capital trends
• EBITDA adjustments
• Accounting policies
• Margin fluctuations
• Significant contracts
• Industry-specific risks

The resulting report helps buyers, investors, and lenders understand what level of earnings is sustainable after a transaction closes.

However, one important thing to note is that some QoE providers allow for limited scope reports, which you can find an example of in our own service offering. If you’re trying to keep costs low, you can request specific portions of a QoE report if not all sections are needed.

What Causes QoE Costs to Increase?

We get it. Everyone says ‘it depends’. But depends on what? It’s hard to understand the quotes QoE providers may give you when you aren’t sure what influences the price itself. Here are the main contributing factors:

1. Revenue Size

Larger companies generally require more testing, more documentation, and more data analysis. There is a significant difference between a $3 million revenue company and a $300 million revenue company. This usually means more time and effort for the accountant conducting the QoE engagement- and therefore more expensive.

However, revenue alone rarely determines cost, but it is a good indicator of transaction volume and financial complexity.

2. Number of Entities

A company with one legal entity is typically easier to analyze than a business operating through multiple entities.

For example:

Lower Complexity

• One operating company
• One set of books
• One bank account structure

Higher Complexity

• Parent company
• Three subsidiaries
• Multiple ownership groups
• Intercompany transactions

Each additional entity creates more reconciliation and analysis work. Even if two businesses have the same amount of revenue, one may have a pricier QoE cost because they have multiple entities while the other does not.

3. Quality of Financial Records

This is often one of the biggest pricing factors. Consider two companies generating $15 million in annual revenue:

Company A

• Monthly financial closes
• Reconciled accounts
• Consistent bookkeeping
• Organized supporting documents

Company B

• Significant bookkeeping cleanup required
• Missing reconciliations
• Personal expenses mixed with business expenses
• Inconsistent reporting

Company B may require twice the effort despite being the same size. Processes that would have taken a few hours may turn into a few days.

4. Industry Complexity

Some industries naturally require more diligence than others.

Generally less complex:

• Professional services
• Consulting firms
• Marketing agencies

Generally more complex:

• Software companies with deferred revenue
• Government contractors
• Healthcare organizations
• Manufacturing businesses
• Construction companies
• Multi-location franchises

Industries with unique revenue recognition rules or regulatory requirements often require additional analysis.

5. Number of Revenue Streams

A company selling one product through one channel is easier to evaluate than a company with multiple revenue models.

For example:

Simple

• One service offering
• Recurring customer base

Complex

• Product sales
• Subscription revenue
• Licensing revenue
• International sales
• Project-based contracts

Each revenue stream introduces additional testing requirements.

6. Transaction Timeline

Lastly, rush projects often cost more.

A buyer requesting a completed QoE report within two weeks may require additional staffing and resources compared to a six-to-eight-week engagement. The sooner you identify the need for a QoE report and sign an engagement with a provider, the better.

Real-World QoE Pricing Examples

While every engagement is unique, the following examples illustrate how pricing could scale when we take into account the previous variances. Important note: these are not guarantees of our pricing or other company’s pricing. While this may be indicative of what to expect, they are not universal, and other reasoning may be given for why your QoE engagement costs more or less.

Example 1: Small Owner-Operated Business

Revenue: $2 million

Industry: Professional Services

Employees: 10

Entities: 1

Financial Records: Clean

Estimated QoE Cost:
$6,000 – $11,000

The business has straightforward operations, limited revenue streams, and organized financial records.

Example 2: Regional Service Company

Revenue: $15 million

Industry: Home Services

Employees: 75

Entities: 1

Financial Records: Generally clean

Estimated QoE Cost:
$11,000 – $20,000

Additional analysis is required due to transaction volume, payroll complexity, and EBITDA normalization adjustments.

Example 3: Software Company

Revenue: $25 million

Industry: SaaS

Employees: 70

Entities: 2

Financial Records: Clean

Estimated QoE Cost:
$20,000 – $30,000

Recurring revenue analysis, deferred revenue review, customer retention metrics, and revenue recognition testing increase complexity.

Example 4: Manufacturing Company

Revenue: $75 million

Industry: Manufacturing

Employees: 100

Entities: Multiple

Financial Records: Moderate complexity

Estimated QoE Cost:
$30,000 – $60,000

Inventory analysis, cost accounting, multiple facilities, and working capital considerations significantly increase diligence requirements.

Example 5: Private Equity Platform Acquisition

Revenue: $200 million+

Industry: Multiple Business Units

Entities: Numerous

Financial Records: Complex

Estimated QoE Cost:
$60,000 – $100,000+

Large transaction volumes, multiple reporting structures, acquisitions, and extensive diligence requirements drive costs higher.

Choosing the right QoE Provider

Is the best QoE provider the cheapest? Not necessarily.

A Quality of Earnings report can influence transaction value by millions of dollars, so deciding on who to execute it is not a decision to be based solely on cost.

This may create problems if critical adjustments, accounting issues, or working capital concerns are overlooked. Instead of focusing exclusively on cost, buyers and sellers should evaluate:

• Relevant industry experience
• Transaction experience
• Scope of services
• Report quality
• Timeline expectations
• Ability to support discussions with buyers, lenders, and investors

Conclusion

A Quality of Earnings report is a valuable part of the transaction process, but varies in price because every business presents a different level of complexity, risk, and diligence requirements.

For a smaller business, a QoE engagement may cost less than $15,000. For larger or more complex organizations, costs can exceed $150,000.

The most accurate way to understand cost is to meet directly with a QoE provider who can prepare a quote based on your specific financial situation. Reach out to CKH Group to get a quick estimate.

The above article only intends to provide general financial information and is based on open-source facts, it is not designed to provide specific advice or recommendations for any individual. It does not give personalized tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm/errors/claims arising from the articles. Whilst every effort has been taken to ensure the accuracy of the contents, we will not be held accountable for any changes that are beyond our control.