Quality Of Earnings

Detailed financial assessment of acquisition opportunities 

Expert Quality Of Earnings Advice For Business Acquisitions

We carry out independent and detailed financial reviews to prepare quality of earnings reports. These reports help shareholders, investors, business owners, board members, and managers make smart choices when buying a business. Buying a business is a big deal. It's crucial to know what you're getting into: where the business makes it's money, the financial responsibilities you're taking on, and the potential financial risk areas.

Our service focus on careful examination of all financial aspects of the business you're considering. We look at past and future financial performance, providing advice for clients to make well-informed decisions. We know how important this step is in buying a business, and we're dedicated to giving you the financial insights you need to succeed.

When you're thinking about buying another company, you usually propose a price. But agreeing to buy is often conditional on completing a thorough check-up of the company's financial health, known as due diligence. You should only go ahead with the deal if this check-up doesn't reveal any big problems.

Our advice on whether or not buying a business is a good financial decision is straightforward and practical. It adds to the guidance you get from your legal and tax advisors. We tell you plainly if the deal and its terms make sense financially, based on our findings.

Our team is made up of highly skilled Chartered Accountants, Business Valuers, Business Brokers, and Forensic Accounting Specialists. Many of us have worked at the biggest accounting firms, where we gained a lot of experience in auditing, tax, and restructuring. This means our financial advice is well-grounded and dependable.

Thanks to our direct experience with buying and selling businesses for our clients, we have a deep understanding of the financial factors and risks involved. We share our knowledge with you as part of our service, helping you make the best decision.

Groves & Partners is well-known for giving practical and straightforward financial advice. Most clients come to us through recommendations from accountants, lawyers, and other professional advisors.

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Quality Of Earnings - Frequently Asked Questions

Here are the most commonly asked questions in relation to our quality of earnings services. Feel free to contact us to ask your own questions or for us to elaborate on our answers below.

When should I commence undertaking quality of earnings on a business purchase?

Whilst circumstances can differ, in our view, formal quality of earnings investigations are best commenced immediately following initial transaction terms are agreed between a potential business buyer and business seller. This is in circumstances where it becomes clear that a transaction is afoot between the parties. Commencing earlier than this can cause business buyers to incur unnecessary spend on professional fees. And commencing later than this often leads to bad transaction outcomes.

How long does a typical quality of earnings process take?

The length of a quality of earnings service can vary depending on the complexity of the transaction, the industry involved, and the scope of the business review. In general, a thorough analysis can take anywhere from a few weeks to several months to complete.

Conducting an analysis for a small business acquisition typically requires a few weeks to complete, whereas a comprehensive evaluation for a significant acquisition involving a large corporate entity may take several months to finalise.

Other factors that can impact the length of the quality of earnings  process include the availability of information and access to key personnel, the complexity of the financial statements, and the involvement of legal or regulatory authorities.

Ultimately, the duration of the examination will depend on the specific circumstances of the transaction, and the needs of the parties involved. It is important for us to work closely with our clients to establish a timeline, and ensure that the check is completed in a timely and efficient manner.

How does your team ensure confidentiality during the quality of earnings process?

Maintaining confidentiality is critical during the evaluation process to protect the sensitive information that is being shared between the parties involved. Here are some ways that we ensure confidentiality during the quality of earnings service:

  • Non-Disclosure Agreements (NDAs): We ask all parties involved to sign an NDA before sharing any confidential information. The NDA outlines the terms of the confidentiality agreement and specifies the consequences of any breach of confidentiality.
  • Secure Data Rooms: A secure data room is an online platform that allows parties to share confidential information in a secure and controlled environment. We can use a secure data room to ensure that only authorised parties have access to the information.
  • Limited Access: Limiting access to confidential information to only those individuals who need to know. For example, we can restrict access to the data room to only those involved.
  • Encryption and Password Protection: All documents and files shared during the process can be encrypted and password-protected to prevent unauthorised access.
  • Track and Audit Access: Tracking and auditing all access to the data room, ensuring that any unauthorised access attempts are detected and dealt with promptly.

By taking these steps, Groves & Partners can help ensure that confidential information remains secure and protected during the quality of earnings process.

Will you project manage our business purchase?

Whilst we are very comfortable in providing financial risk management advice on a stand-alone basis, we also have significant experience in project managing entire business purchases for clients and often do so. Many clients initially engage with us to undertake quality of earnings engagements for them. As the transaction progresses, they will request that we project manage some or all components of the transaction. This includes undertaking negotiations on their behalf, assisting them to instruct lawyers, and other important matters. We can provide this service for clients if they wish.

Will you tell me what the business value is and what price is suitable?

A key component of our quality of earnings is providing advice to you regarding the value of the business you are purchasing. Further to this, we commonly provide advice to clients as part of our quality of earnings / financial due diligence services regarding how to best negotiate and structure the purchase price for the transaction. This includes the use of earn-out arrangements, and other deferred or contingent payment arrangements to manage the price, in consideration of the business’ risks.

What expertise is provided?

Your engagement will be managed by a senior member of the Groves & Partners team. We are a firm of experienced and professional advisors including Chartered Accountants, Registered Business Valuers, and Registered Business Brokers. Our team consists of experts with a diverse range of industry and service delivery experience, most of whom have previously worked with the world’s largest accounting and consulting firms, such as Deloitte, EY and PwC.