M&A Office Hours: What Is Quality of Earnings In Mergers & Acquisitions | Larry Simon

E35: On today's special episode of The Cashing Out Podcast I'm speaking with Larry Simon, a Certified Public Accountant and partner at Doeren Mayhew, a top accounting firm in North America.

Now, instead of our typical format of interviewing a founder who has built and sold a business, we thought we would interview an M&A expert to educate our founders around the decision of whether to do a Sell Side Quality of Earnings report or Quality of Earnings completed by sellers before they begin a sale process is one of the most effective ways a business owner can help maximize the sale of his or her business?

And Larry is a natural educator on this topic. We cover the basics of what a Quality of Earnings analysis is, what the difference between a sell side and a buy side cover is, and what the underlying time and cost requirements to have a Quality of Earnings analysis completed prior to marketing your deal to buyers. The audio of this conversation was previously recorded as part of our Exitwise Live Event series entitled, "What Is Quality of Earnings and Why Is It a Critical Part of Selling Your Business?"

Episode Sponsor:
Thanks to Doeren Mayhew for sponsoring this episode of the Cashing Out podcast!  Doeren Mayhew is one of Forbes best tax and accounting firms in the United States. Check out their Quality of Earnings ("QofE") offerings, and everything else they can help you with at doeren.com

Episode Highlights:
  • (3:07)  Larry Simon introduction, and why he's considered an expert when it comes to Quality of Earnings (QoE)
  • (4:30)  The theory and basics behind a Sell-Side Quality of Earnings analysis
  • (6:13)  Creating credibility prior to the start of your M&A process
  • (9:28)  Examples of the good and the bad in M&A...  where an effective QoE analysis did (or could have) dramatically changed the outcome of a deal
  • (11:57)  The three primary reasons to get a Sell Side Quality of Earnings prior to kicking off an M&A process
  • (13:25)  Q&A 1 - Can I run a Quality of Earnings process myself, or do I need to hire an accounting firm to support?
  • (15:26)  Q&A 2 - What is the proper way to interview an accounting firm in preparation of signing an engagement letter?
  • (17:34)  Q&A 3 - What does a Quality of Earnings analysis cost?
  • (19:54)  Q&A 4 - What is the time commitment needed by my executive team and CFO to support a Sell Side Quality of Earnings?
  • (23:32)  Q&A 5 - If I have inbound interest from a strategic buyer, do I still need to run Sell Side Quality of Earnings?
  • (25:01)  Q&A 6 - What if the buyer runs a Quality of Earnings analysis in addition to the analysis done on the Sell Side?
  • (26:38)  Time kills all M&A deals

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Episode 35 Required Reading:

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M&A Office Hours: What Is Quality of Earnings In Mergers & Acquisitions | Larry Simon
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