Quality of Earnings: What You Need to Know
In this episode of the hit podcast The Exit Plan, host Barnaby Cook and PPS Solutions CEO John Hannum discuss the importance of checking on the finances in any business acquisition.
In this podcast appearance, John talks about his extensive experience on the "inside" of corporations employing rollup strategies for growth and how he has translated that corporate experience into services for entrepreneurs who want to acquire new businesses or sell their existing business.
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PPS Solutions is dedicated to educating entrepreneurs to solve business challenges to unlock success by providing fractional CFO services and Due Diligence Services such as Quality of Earnings engagements, Financial Due Diligence, and CFO modeling and financing support to buy or sell any business.
To learn more about how PPS Solutions can help you or your business with a CFO or Full-Service Finance and Accounting, contact us or set up an appointment through our website www.ppsfinance.com
Reading this reminded me of the time I was reviewing a small tech startup’s financials before deciding to invest. At first glance the revenue growth looked impressive, but once I dug into the quality of earnings, the picture changed. I discovered a sizable portion of the sales were tied to a single large contract that was set to expire soon, and a few aggressive accounting adjustments were inflating the profit margins https://www.acma.gov.au/betstop-national-self-exclusion-registertm That deeper analysis saved me from putting a significant amount of capital into a venture that would have struggled once the contract ended. It also taught me to always ask where the cash is really coming from, not just what the numbers say on the surface. Your breakdown…