The Real Cost of a Quality of Earnings Report

There is no reliable public benchmark for quality of earnings cost. Every published fee range you will find is an unattributed estimate from an advisory firm's own marketing page or a marketplace's lead-generation guide, not a sourced study, and the ranges vary so widely between them that quoting one as fact would be misleading. That absence of a real number is itself the more useful fact for a deal team, because it means the fee is set deal by deal, against an assumption about the target's books that nobody has tested yet. Diligence budgets rarely break because a QoE advisor is expensive; they break because the scope quietly grows past what the engagement letter priced, and nobody puts a figure on that drift until the invoice lands. The interesting question is not what a QoE engagement costs on average. It is how often the engagement ends up costing more than the number in the engagement letter.

Financial diligence, and specifically the quality of earnings (QoE) engagement, overruns more often than any other diligence workstream, and it is not close. Legal DD scope grows with jurisdictions and contract count, which a buy-side team can usually estimate before kickoff. QoE scope grows with the state of the target's books, and nobody knows that until the accountants are already inside them.

What Does a Quality of Earnings Report Cost?#

No credible source publishes one: every number circulating online traces back to an advisory firm's own unsourced estimate rather than a disclosed study. Ask five advisory firms what a QoE engagement costs and you will get five different answers, none of them backed by a published study. The fee is usually quoted as a flat number tied loosely to deal size, not a percentage, and every public "typical fee" table circulating online, including the ones this post used to cite, turns out on inspection to be an advisory firm's own estimate with no underlying data disclosed. That is worth naming plainly rather than smoothing over: a deal lead searching for a QoE cost benchmark will find plenty of numbers and almost no sourcing behind any of them.

What is verifiable, because it comes from the scope itself rather than a vendor's pricing page, is what the fee is buying. A standard QoE engagement covers three years of trailing EBITDA analysis, a run-rate view on the trailing twelve months, working capital normalisation, customer concentration, and validation of every add-back the seller wants to add to reported earnings. That scope is fairly consistent across providers. What varies, and what no public benchmark captures, is how many hours it takes to deliver it against a specific target's books.

A single-entity business with a clean general ledger and one bank account needs meaningfully fewer accountant hours than one with three trading entities, a recent bolt-on acquisition, and a finance function that still reconciles in spreadsheets, even at identical revenue. That gap is real and well understood inside the profession; it is just not something anyone has published a study quantifying.

Who pays for that scope, and when, is also shifting. Michael Vaccarella, a partner at the accounting firm Wipfli, told ACG's Middle Market Growth in December 2025 that investment banks are increasingly pushing sellers to commission the report before a buyer ever asks: "Investment banks are saying, 'You should get a sell-side QoE so that we don't have any surprises later during buyer diligence.'" Scott Linch, managing partner at Forvis Mazars Capital Advisors, put the commercial logic more bluntly in the same piece: "If you've told them you're going to deliver $100 and you deliver $80, you're going to get a reduction in your purchase price by $20." GF Data's analysis of 360 deals completed since the third quarter of 2024, cited in the same article, found sellers who commissioned a sell-side QoE achieved average TEV/EBITDA multiples of 7.4x, against 7.0x for those who did not. None of that tells a buy-side deal lead what their own QoE fee will be. It does explain why more sellers are absorbing the cost pre-emptively rather than leaving a contested number to be tested cold once buyer diligence starts.

What Drives the Range: Deal Size, Data Quality, and Carve-Out Complexity#

Deal size sets the floor. Everything else sets how far above the floor the final fee lands. Three factors do most of the work.

Data quality is the biggest swing factor and the hardest to price in advance. A target with a single ERP, monthly management accounts that tie to statutory filings, and a finance team that answers requests within a day needs far fewer accountant hours than one where the QoE team is reconciling three systems by hand. The engagement letter is signed against an assumption about data quality that nobody has actually tested yet, because testing it is the engagement.

Carve-out complexity adds a second layer that is easier to see coming but still routinely under-scoped. Separating a division's standalone financials from a parent's consolidated books means allocating shared costs, untangling intercompany balances, and building carve-out financial statements that will survive an auditor's or a buyer's scrutiny. Deloitte's 2026 Global Divestiture Survey of 981 sellers found sign-to-close timelines have lengthened by roughly 6% since 2020, with a median of about three months but stretching to 10 months or more on the longest deals, and only around half of sellers met their own timing and proceeds expectations by the end of 2025, up from about a third the year before. Every extra month of a carve-out is another month of QoE hours.

Add-back disputes are the third driver, and they are the one most deal teams underrate at kickoff. EBITDA add-backs, owner compensation normalisation, one-off costs, non-operating items, are exactly where a buyer's QoE team and a seller's finance function disagree, and each disputed add-back can mean another round of testing before either side signs off on a number. This is where scope creep in due diligence most commonly starts on the financial workstream, and it is rarely visible in the original engagement letter.

Why Do QoE Engagements Overrun More Than Any Other Diligence Workstream?#

QoE overruns more than legal, tax, or commercial diligence because its scope is priced against an assumption, not a known quantity. A legal team scoping DD on a UK target with subsidiaries in three countries can count the entities and estimate the hours with reasonable confidence before day one. A financial diligence team scoping a QoE engagement is pricing against how clean the seller's books turn out to be, which is precisely the thing nobody can verify until the engagement has already started.

That is the mechanism behind most diligence budget overruns generally, not just QoE specifically: scope drifts silently, and nobody prices the drift until the invoice lands. QoE is simply the workstream where this dynamic is structurally worst, because the trigger for expanded scope, poor data quality or disputed add-backs, is discovered by the same team that is being paid to investigate it. There is an obvious incentive problem buried in that sentence, and most deal leads never interrogate it: the advisor who finds the mess is also the advisor who bills to clean it up.

How Do Add-Back Disputes Turn Into Overrun?#

Add-back disputes turn into overrun because each one reopens a piece of the analysis the original fee already assumed was closed. SRS Acquiom's 2025 M&A Working Capital Purchase Price Adjustment Study, covering more than 1,200 private-target acquisitions worth over $298 billion, found that working capital purchase price adjustments now appear in more than 90% of private-target deals, up from around 50% a decade earlier, with the average buyer's initial adjustment claim running about 0.9% of transaction value and 24% of claims exceeding 1% of transaction value. Those particular disputes are resolved after signing, but the pattern they reveal, that earnings and price adjustments are contested far more often than deal teams plan for, is exactly what makes the QoE fee estimate fragile before signing too.

Every contested add-back inside the QoE process itself works the same way in miniature. The advisor flags an owner expense as non-recurring; the seller pushes back with documentation; the QoE team has to re-test the underlying transactions rather than take the classification at face value. None of that is bad advisor behaviour. It is the job working as intended. The problem is that the original fee estimate was built assuming a manageable number of these, and a target with genuinely messy books can produce far more than "manageable."

Sarah Beckett Ference, a risk control director at CNA, the underwriter of the AICPA's Professional Liability Insurance Program, has written that a meaningful share of the liability claims filed against CPA firms trace to exactly this pattern of expanded scope, and that defending such a claim gets harder once the firm's actual work has moved beyond what the engagement letter documented. A QoE engagement carries the same exposure from the other side of the table: the buyer, not the accountant, is the one holding the budget that quietly outgrew its scope.

This is where tracking advisor fees during due diligence matters most on the financial workstream specifically, because a QoE change order rarely arrives labelled as one. It shows up as an extra week on the timeline and a bigger number on the next invoice, and by the time anyone reconciles that against the original engagement letter, the deal has usually already closed or died.

How Should a Deal Team Scope and Track a QoE Engagement?#

None of this eliminates the underlying uncertainty. A QoE engagement is, by design, an investigation into how reliable a set of numbers actually are, and investigations sometimes find more than expected. The data behind this post also skews toward larger, more complex separations; a sub-£10M owner-managed business with a single bookkeeper behaves differently, and the dynamics above compress accordingly. What a deal team can control is not the fee benchmark, because a trustworthy one does not exist. It is whether the scope expansion is priced and agreed as it happens, or discovered on the final invoice with the deal already three weeks from signing.

Frequently Asked Questions#

What does a quality of earnings report cost?#

There is no credible published benchmark. Every "typical QoE fee" table circulating online comes from an advisory firm's or marketplace's own unsourced estimate rather than a disclosed study, and the ranges disagree with each other enough that treating any single one as authoritative would be misleading. What is consistent is the scope: trailing EBITDA analysis, working capital normalisation, and add-back validation, priced against how clean the target's books turn out to be.

What drives the cost of a QoE engagement?#

Deal size sets the baseline, but data quality, carve-out complexity, and the number of contested add-backs move the final fee within, and often above, the original estimate. A target with clean, reconciled accounts and a single entity needs far fewer hours than one with multiple systems and disputed adjustments.

Why do quality of earnings engagements go over budget more than legal or tax diligence?#

Legal and tax scope can usually be estimated from entity count and jurisdiction before work starts. QoE scope depends on how clean the target's books turn out to be, which the QoE team only discovers once the engagement is already underway, so the original fee is priced against an assumption rather than a known quantity.

How long does a quality of earnings report take?#

A standard QoE engagement runs several weeks from kickoff to draft report, plus revisions. Carve-out engagements or targets with poor data quality routinely extend well beyond that: Deloitte's 2026 divestiture research found sign-to-close timelines stretching past ten months on the longest deals, against a median of around three months.

Can a QoE fee be fixed upfront?#

Most QoE engagements are quoted as a fixed fee, but the engagement letter usually carves out a right to reprice if data quality or scope materially changes. The practical fix is agreeing what triggers that reprice conversation before the engagement starts, rather than discovering the trigger after the fact.

Sources#

1. 2025 M&A Working Capital Purchase Price Adjustment Study, SRS Acquiom, 2025. Purchase price adjustment prevalence and claim sizes across 1,200+ private-target deals.
2. 2026 Global Divestiture Survey, Deloitte, 2026. Sign-to-close timelines and seller expectations on complex separations, based on 981 seller respondents.
3. Why More Sellers Are Using Quality of Earnings Reports for M&A Deals, ACG (Middle Market Growth), December 2025. Named-practitioner commentary from Wipfli and Forvis Mazars Capital Advisors, plus GF Data's analysis of valuation multiples across 360 deals.
4. Perspectives From the Profession: Don't Let Scope Creep Lead You Out of Bounds, Sarah Beckett Ference, Inside Public Accounting, July 2026. CNA risk-control analysis of scope-creep liability claims against CPA firms.