Will your earnings survive the buyer's review?
Free in Baratelli Bankable: Loans and planning > Sale readiness.
Before a buyer pays for your business, and before a lender finances the purchase, someone goes through your books line by line. Sale readiness runs the same tests on your own books first, so you fix what you can and support the rest before it costs you at the closing table.
When a buyer finances a purchase of $3 million or more with an SBA 7(a) loan, the lender must now order an independent quality of earnings (QoE) report. It proves revenue to bank deposits, tests every add-back, and sets the earnings the lender uses to size the loan. Every dollar of earnings it removes comes off the price at the multiple the buyer is paying.
Open Baratelli BankableQuality of earnings from Baratelli Credit ServicesUnderwriting and QoE services
What it tests, in your own books
- Add-backs that hold up. Costs you call one-time but pay every month are the first thing a QoE throws out.
- Personal spending on the company card that is not listed as an owner expense.
- Revenue proved to deposits, year by year, the way a QoE adds up your bank statements.
- Revenue in the right year: year-end entries, their reversals, and any jump in sales just before the sale.
- Wages against your Forms W-2, three years of monthly history, and how much rides on your largest customers.
What you get
- A score out of 100 and, for each test, what to fix and where to fix it in Bankable.
- Your revenue, gross margin and EBITDA month by month: the view a buyer's QoE builds first.
- A readiness report (PDF), and a QoE-ready package: your general ledger in the layout QoE providers expect, sales by customer, monthly results and your add-backs.
- One click to send the package to your QoE provider's or lender's secure upload link, encrypted on your device.
Your books stay yours
- Bankable is free. Your books stay on your own device; nothing is sent anywhere unless you send it.
- Already on QuickBooks? Import your company in minutes and run the check.
Want a sell-side quality of earnings before you go to market? Baratelli Credit Services prepares them, and your QoE-ready package is everything we need to start: Philip A. Baratelli, CPA · philbaratelli@gmail.com · 904-846-3011.