Insights | Quality of Earnings & SBA Diligence | Tonnesen

Insights

Insights for Business Buyers, Sellers, and Lenders

We do around 40 of these a month, so we end up seeing the same things over and over. This is where we write them up: the new SBA rules, add-backs that do not hold up, working capital nobody negotiated, and case studies from deals we worked on.

Sell-Side QoE: What It Costs and What It Buys Back

Sellers resist paying for diligence on their own business, and the arithmetic usually says they should not. What a sell-side QoE actually prevents, when it pays for itself, and when it genuinely is not worth it.

How Long Does a Quality of Earnings Report Take?

Usually two to three weeks from the day we have everything we asked for. Hardly any of that is us running numbers though, and the parts that stretch are the parts you can control.

Proof of Cash: The Procedure Most Lenders Used to Skip

Tying reported revenue to money that actually arrived in the bank is the single procedure that catches the most in a Quality of Earnings engagement, and it is the one most often left out. How it works and what it finds.

Can the Same Firm Do the QoE and the Business Valuation?

A question every SBA lender is now having to answer. What the SOP says, what lenders actually seem to prefer, and the honest case on both sides of doing both engagements with one provider.

What to Have Ready Before a Quality of Earnings Engagement Starts

The documents a QoE provider will ask for, why each one is on the list, and the four items that hold up more engagements than everything else combined. Useful whether you are the buyer, the seller or the lender.

An SBA Lender's Checklist for Commissioning a Compliant QoE

From 1 October, SBA lenders have to engage the Quality of Earnings provider directly. A practical checklist for the process changes that need to be in place: engagement letters, scope, timing, approved providers and file documentation.

Is Your Deal Over the $3 Million SBA Threshold? How It Is Measured

The SBA QoE requirement turns on a $3 million business purchase price, but what counts toward that number surprises people. Seller notes count, appraised real estate does not, and some deal types are exempt entirely.

The SBA Quality of Earnings Rule: The Questions Everyone Is Actually Asking

Ten questions that keep coming up about SOP 50 10 8.1, from lenders, buyers and brokers, with straight answers and an honest note where the answer is still not settled.

Who Chooses the QoE Provider Under the New SBA Rule?

Under SOP 50 10 8.1 the lender engages the Quality of Earnings provider, not the buyer. What that actually means, whether the buyer gets any say, and the questions worth asking your lender before you are under LOI.