What drives the timeline
The analysis itself is rarely the slow part. Time is lost while data is requested, received in pieces and reconciled, and while the diligence team waits for answers from management.
A business with clean monthly closes and a single entity moves faster than one with cash-basis books and several entities, because the second needs conversion and consolidation work before the analysis can start.
Stages of a QoE
IllustrativeMost delays arise before the analysis starts, while data is gathered and reconciled.
What shortens or lengthens a QoE
| Shorter | Longer |
|---|---|
| Monthly accrual-basis books, closed and reconciled | Cash-basis books that need conversion to accrual |
| One entity | Several entities, intercompany balances or foreign operations |
| Complete data in the first request | Data arriving in stages |
| Two or three years of history | Many periods, restatements or a change of systems |
| Management available to answer questions | Slow answers or changes in the finance team |
Worked example
Alder Creek answered the first data request in one batch, with monthly trial balances already reconciled to the financial statements, so the analysis started early. A comparable business on cash-basis books with three entities would need the books converted and consolidated first, which adds time before the adjustments can even be tested.
Alder Creek Manufacturing, Inc. is a fictional company. All figures are illustrative.
Why it matters in a deal
The QoE sits on the critical path to signing, and exclusivity periods are limited. Building a realistic QoE timeline into the deal plan avoids pressure on the analysis at the end. For SBA 7(a) acquisition loans that require a lender-obtained QoE, the turnaround time belongs in the closing timeline.
Red flags
- A promised timeline that does not depend on data being available
- Data arriving after the analysis has started, forcing rework
- Books that cannot be reconciled to bank statements