Article
Improve the success of agribusiness acquisitions with quality of earnings reports
Feb. 13, 2026
A comprehensive analysis of a company’s true profitability is critical for both buyers and sellers in agribusiness acquisitions. But traditional financial statements based on historical earnings often overlook operational nuances and fail to reflect the true enterprise value.
A Quality of Earnings (QoE) report overcomes this challenge by providing a detailed analysis of normalized earnings. A QoE examines historical performance and necessary adjustments, offering insights into a company's operational health and earnings sustainability.
By addressing the unique financial challenges faced by agribusinesses, a QoE report enhances the understanding of historical performance and, in turn, future earning potential. Leveraging a QoE report in a business acquisition can significantly impact the success of the transaction.
Benefits of a QoE report
In a business acquisition, buyers and sellers both seek to collect as much information about the company as possible. QoE reports provide crucial analysis and information during the business acquisition process for both buyers and sellers.
For buyers, a QoE report provides additional information about the historical financial performance of the business from an expert source.
For sellers, a pre-sale QoE report identifies issues, such as incorrect accounting treatment or unique historical earnings circumstances, which may arise during a buyer’s diligence.
Buyers or sellers that do not engage an accounting firm to perform a QoE report will be operating with more limited information than those that have a QoE report.
Key components of a QoE report
Enterprise value is frequently calculated using a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA), but can also be based on free cash flow (FCF) or revenue. QoE reports typically include the following analyses to help buyers and sellers understand the true value of a company:
- Adjusted EBITDA. This summary of normalized historical earnings accounts for non-recurring income and expenses and presents a clearer view of ongoing earning potential.
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.