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M&A · Quality of earnings · Washington, DC region

Quality of earnings for DC-area deals, including government contractors.

Before you sign a purchase agreement, know what the business really earns. Our QoE reports test adjusted EBITDA, working capital and debt-like items, and for government contractor targets, the contracts, rates and compliance issues that drive value in this market.

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Forms & standards
Adjusted EBITDANet working capital pegProof of cashDebt-like itemsFAR 42.12 novation13 CFR 121.404

Serving Washington, DC, Northern Virginia, Maryland.

What we handle

What makes a DC-area QoE different

A standard quality of earnings report tests whether reported earnings are accurate, recurring and supported by cash. In the Washington region, many targets earn most of their revenue from federal contracts, which adds questions buyers in other markets rarely face.

Contract vehicles, small business set-aside status, indirect rate exposure, DCAA audit history and novation timing can all change what a business is worth after closing. We analyze those alongside the financial diligence so price and deal terms reflect them.

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  • Adjusted EBITDAOwner compensation, one-time items, related-party transactions and pro forma adjustments, each supported and quantified.
  • Proof of cash and revenue testingReported revenue tied to bank deposits and to invoices by contract or customer.
  • Net working capitalMonthly trend analysis and a defensible working capital target (peg) for the purchase agreement.
  • Debt and debt-like itemsDeferred revenue, accrued bonuses, unpaid taxes, rate-variance liabilities and other items to deduct from price.
  • Contract and backlog reviewFunded and unfunded backlog, recompete timing, contract vehicles and customer concentration.
  • Small business status impactWhich revenue depends on set-aside or 8(a) status that may not survive the acquisition.
  • Indirect rates and DCAA exposureOpen incurred cost years, rate variances and potential refunds owed to the government.
  • Tax diligenceEntity structure, state nexus, payroll taxes and sales tax exposure.

Where we help

Typical engagements

Buy-side

Acquiring a government contractor

Diligence on a $5–100 million revenue federal services firm before signing.

Sell-side

Preparing to sell

A seller QoE that anticipates buyer questions and supports the asking price.

Lender

Financing the deal

Diligence that lenders and SBA loan programs can rely on.

Commercial

DC-area commercial targets

Professional services, healthcare, construction and hospitality businesses.

Our approach

How the engagement runs.

Scope

Agree on the key risks and the deal timeline with you and your counsel.

Analyze

Data room review, management interviews and testing of earnings and cash.

Report

A clear written report with adjusted EBITDA, working capital and findings.

Support the deal

Help with price adjustments, purchase agreement terms and closing statements.

Questions

Frequently asked

If your question isn't here, call (703) 880-8412 and you'll reach a person.

What is a quality of earnings report?

A quality of earnings (QoE) report analyzes whether a company's reported earnings are accurate, sustainable and backed by cash. It usually adjusts EBITDA for one-time and owner-related items and sets a working capital target for the deal.

How is QoE different from an audit?

An audit gives an opinion on whether financial statements follow accounting standards. A QoE is a transaction-focused analysis of earnings, cash and working capital, designed to support price and deal terms. Many deals use both.

What's special about buying a government contractor?

Value often depends on contracts that may require novation, small business set-asides the buyer can't keep, and indirect cost rates subject to DCAA audit. After an acquisition, a small business contractor generally must recertify its size within 30 days, which can affect eligibility for future set-aside awards and orders.

How long does a QoE take?

Most engagements take three to six weeks, depending on the data available and the size of the business.

Do you do sell-side QoE?

Yes. A sell-side QoE helps owners find issues before buyers do, defend their adjustments and shorten the buyer's diligence.

Can you help after closing?

Yes. We help with closing statements, working capital true-ups, purchase price allocation and integrating the acquired company's accounting and rates.

Latest updates

IRS & federal tax

All IRS & federal tax updates
Nov 5, 2026IRS & federal tax

IRS releases 2027 inflation adjustments (Rev. Proc. 2026-35)

For 2027 the joint-return standard deduction rises to $33,200, the estate tax basic exclusion to $15,480,000, the annual gift exclusion to $20,000 and the Section 179 expensing limit to $2,640,000. Our advisors recommend revisiting year-end gifting and equipment purchase plans with these figures in mind.

Source: IRS (IR-2026-133)

Our guidance

Related

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Transactions

Mergers & Acquisitions

Buy-side and sell-side financial due diligence, quality of earnings (QoE) reports, net working capital analysis, tax due diligence and business valuations for middle-market transactions.

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Address, local tax issues and the full range of services in Washington, DC.

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