Quality of Earnings Report Cost: What Buyers Pay and When SBA Requires One

Short answer: A quality of earnings report on a small US acquisition generally runs from about $5,000 to $30,000, and the price is set by how messy the seller's books are far more than by how big the deal is. From 1 October 2026 the SBA makes one mandatory on any change-of-ownership 7(a) loan where the purchase price is $3,000,000 or more, and that report has to be prepared for the lender rather than for you. The buyer pays, and on an SBA deal what you spend counts toward your required equity injection. Last updated August 2026. Educational only, not financial, legal or tax advice.

How much does a quality of earnings report cost?

There is no published market rate. No accounting body surveys QoE fees, and most of the ranges circulating online are not traceable to anyone who actually sells the service. So rather than repeat them, we read one provider's own published rate card firsthand on 26 August 2026. Bedrock, a CPA-led firm that works on acquisitions between $1,000,000 and $40,000,000, publishes two service tiers:

It also publishes a separate breakdown of what it typically bills by deal size, which sits inside those same two tiers rather than adding a third option:

The Express tier is described as covering deals under $2,000,000 or pre-LOI work, and includes a profit and loss review across two to three years, bank statement reconciliation, a cash proof and primary EBITDA normalization. The Standard tier adds add-back validation with documentation, customer concentration and revenue quality analysis, a bank-to-book reconciliation, a lender-ready PDF and a structured Excel data book. Payment terms are published too: 50% deposit to begin, balance on delivery. Big 4 and large regional firms sit well above all of this and generally have minimum engagement sizes that price small deals out entirely.

Why one provider quotes two different prices

Worth flagging, because it is a good lesson in reading sources properly. Bedrock's own article on QoE cost, dated 17 March 2026 and bylined to a CPA, says the firm charges a flat fee of $6,000 to $12,000 depending on complexity. Its pricing page, read the same day, says most Standard engagements are $15,000 to $30,000. Both are published by the same firm on the same site. The deal-size range differs too: the homepage says $1,000,000 to $40,000,000, the pricing page says $1,000,000 to $30,000,000.

The likely explanation is simply that the article is older than the rate card and nobody went back to update it. That is normal and it is not a criticism. The point for a buyer is that a number in a blog post, even the provider's own blog post, is not a quote. Ask for a fixed fee in writing against your specific deal before you rely on any figure, including the ones in the table above.

When does an SBA loan require a quality of earnings report?

This is the change most buyers have not priced in yet. Under SOP 50 10 8.1, which applies to any application issued an SBA loan number on or after 1 October 2026, a Quality of Earnings report is mandatory on an Initial Acquisition or Business Expansion where the business purchase price is $3,000,000 or more. That threshold is measured on the purchase price before any buyer equity or seller debt is applied, so structuring around it does not work.

Two conditions matter as much as the threshold. The report must be prepared for the lender, which means one you commissioned for yourself is not usable, and neither is one the seller had done. And it must contain a Cash Proof. Separately, every change of ownership now needs an independent business valuation from an accredited Qualified Source, requested by and prepared for the lender, which is a different document with a different bill attached. The full financing picture is on our guide to using an SBA loan to buy a business.

There is a sting in the tail that catches people. If the QoE lands on a lower earnings figure than the seller's books showed, the lender has to recalculate debt service coverage from the QoE number. If the price no longer clears coverage, the loan amount comes down and you make up the difference in cash. A report you ordered to protect yourself can therefore increase the cash you need at closing, which is an argument for ordering it early rather than an argument against ordering it.

What is in a quality of earnings report?

The core of it is EBITDA normalization: taking the profit figure the seller reported and adjusting it for owner compensation, personal expenses run through the business, one-off items and anything else that will not exist after you own it. That normalized number is what your multiple should be applied to, not the headline profit, and the gap between the two is often the whole negotiation. If you are still working out which earnings basis a listing is quoting, we break the three apart in SDE vs EBITDA vs ARR multiples.

The Cash Proof is the part with teeth. It reconstructs cash receipts and disbursements by tying bank statements to the income statement and to the tax return, across the trailing twelve months and the last two fiscal years. It is deliberately hard to fake, because it does not ask what the seller says they earned, it asks what actually landed in the bank. That work is far quicker when the underlying records are already machine-readable, which is why buyers on smaller deals increasingly run the statements through automated account reconciliation before an accountant ever opens the file, and turn up on day one with the discrepancies already listed.

A quality of earnings report is one workstream inside a much wider process, and it is worth seeing where it sits before you commission one: the full sequence, workstream by workstream, is in our M&A due diligence checklist. A full report will also test customer concentration, which is the risk that one or two accounts carry the business. That is a common deal-killer and it deserves its own look before you spend anything on diligence at all, which we cover in customer concentration in a SaaS acquisition. All of this runs faster and cheaper once records are organized in one place for the accountant, which is the whole point of the data room; what that costs is in virtual data room pricing.

Who pays for the quality of earnings report?

The buyer, in a normal buy-side process. That is worth stating plainly because first-time buyers routinely assume diligence costs are shared or come out of the deal. They do not: your advisers bill you, and they bill you whether or not the deal closes. The other half of that bill is legal, and we break the rates down in mergers and acquisitions attorney cost.

On an SBA-financed acquisition there are two consolations. The SBA permits the out-of-pocket cost of the financial due diligence reports to be passed to the borrower, and whatever you spend counts toward your required equity injection rather than sitting on top of it. So a $15,000 report on a deal needing a $50,000 injection is not $15,000 of extra cash, it is $15,000 of the injection you already had to fund. In a sell-side or auction process a seller sometimes commissions a vendor QoE and shares it with bidders, which front-loads the cost onto them, but you should read a seller-commissioned report as a starting point rather than as verification, and on an SBA deal your lender will not accept it anyway.

Should you order it before or after the LOI?

After, in almost every case, and the reason is exclusivity. A full QoE is expensive enough that you do not want to pay for it while the seller is still free to sell to somebody else, so the normal sequence is to sign a letter of intent, use the no-shop clause to take the business off the market, then spend money inside that window. Getting the exclusivity period long enough to fit a two to four week report is one of the practical reasons that clause gets negotiated at all, and we lay out every clause and what binds you in our guide to the letter of intent to buy a business.

The exception is the cheap end. A five-day express review priced under $10,000 is genuinely usable before you commit to a price, and providers now market that tier as pre-LOI work for exactly that reason. If the seller's books look disorganized on first inspection, a small spend at that stage can save you from anchoring your offer to a profit figure that will not survive. Where this fits in the wider sequence, from search through to closing, is set out in how to buy a business.

Is a quality of earnings report worth it?

On any deal where you are personally guaranteeing the debt, yes. The arithmetic is unforgiving in your favor: at a 4x multiple, a single add-back that does not survive scrutiny moves the fair price by four times the annual amount, so one bad $25,000 add-back is a $100,000 error in what you should be paying. A report costing $10,000 has to catch very little to pay for itself, and if it kills a deal that was going to fail after closing, the return is the entire purchase price.

The honest counter is deal size. Below roughly $500,000, a full QoE can be a meaningful percentage of the purchase price, and a competent accountant working through the bank statements and tax returns for a few thousand dollars covers most of the same ground. The threshold worth thinking about is not a dollar figure so much as a question: how much of your own money is at risk, and could you absorb the loss if the reported profit turns out to be 30% lower than the seller said? On an online business the equivalent protection is buying somewhere the revenue was verified at source before the listing published, which is the model Buyouts is built on, with MRR, ARR, growth and churn checked before a listing goes live. Browsing here is free, and buyer membership is planned rather than currently on sale.