On this episode of Still Searching with Jed Morris, quality of earnings specialist Caleb Basile breaks down the financial due diligence that kills more deals than anything else in business buying. Caleb is a CPA who left the Baker Tilly audit track to do QoE work full time, and he ran 57 of these reports last year on deals from $1M to $50M in revenue. His estimate: when a deal dies in diligence, roughly eight out of ten times it dies on the financials, not the legal.

Jed and Caleb get into the machinery most first-time buyers avoid because it feels uncomfortable: the three sections of a QoE, why reconciliations come first (and why Caleb charges half if the deal dies there), the add-backs that never pass the test, and the concentration risks hiding in QuickBooks. Then the math that ends the debate. If adjusted EBITDA comes back at $700K instead of the $1M the broker claimed, at a 4X multiple that is $1.2M you almost overpaid. A QoE is not a checkbox. It is the cheapest insurance in your deal.

A buyer walks away with: the three reconciliations to demand before anything else, the add-back tests that separate real earnings from wishful math, and a working grasp of net working capital, capex, and the cash conversion cycle.

Full transcript: https://jedmorris.com/podcast/quality-of-earnings-caleb-basile

Watch on YouTube: https://www.youtube.com/watch?v=PE5zluwZfXk

Connect with Caleb Basile: https://www.linkedin.com/in/qoeprep