I have participated in financial vendor due diligence from the seller side. With the investment banker’s guidance and advice, we hired an accounting firm to conduct a quality of earnings (QOE) review. They obtained a complete GL dump for ten years, and examined trends in profitability and account-by-account activity, searching for anomalies and stripping out non-recurring activity, such as special legal issues and owner perqs. The financial modeling was conducted in part using the adjusted expense activity.
