Know What You're Buying Before You Close.
Financial Due Diligence for Business Acquisitions
Uncover financial risks, validate earnings with Quality of Earnings reports, and understand the real financial health of the business before you commit.
Quality of Earnings and Financial Due Diligence Projects
$1M-$15M
Typical Acquisition Size
More Affordable Than Large Regional CPA Firms
Real Acquisition Experience
Our Team of CPAs Have Personally Acquired Businesses
What M&A Financial Due Diligence Covers
Most deals that fall apart do so over something the financial statements never stated plainly. A seller’s books can be accurate and still mislead, because owner compensation, discretionary spending, and one-time costs all sit inside reported earnings without labels attached.
Appletree examines the accounting records, bank activity, and management explanations behind a transaction, then normalizes the numbers so reported earnings reflect what the business would produce under new ownership. We separate the earnings that carry over from the earnings that stop at the closing table, which is the difference between a price that holds up and a price built on a valuation nobody stress-tested.
That distinction matters most on smaller deals, where reporting is least formal. Appletree has completed more than 100 quality of earnings and financial due diligence engagements, most on acquisitions between $1 million and $15 million.
The firm works from offices in Londonderry and Portsmouth, New Hampshire, and delivers engagements remotely for transactions anywhere in the country.
What the Analysis Examines
Every engagement covers the same core ground, though the weight given to each area depends on the business. Appletree builds the scope around where the risk actually sits in the deal in front of you, which often turns out to be somewhere the annual statements do not show it.
- Revenue Quality. Whether reported revenue is recurring, contracted, or one-time, and how reliably it converts to cash.
- EBITDA Adjustments. Add-backs tested individually, so the adjusted figure holds up when a lender or an investment committee reviews it.
- Working Capital. The level of working capital the business genuinely needs to operate, which sets the peg negotiated at closing.
- Cash Flow. How cash moves through the business across a full year, including the seasonal swings an annual summary flattens out.
- Customer and Vendor Risk. Concentration on either side of the business, and what a single departure would do to earnings.
- Financial Trends. Multi-year performance read for direction, rather than a snapshot of the trailing twelve months.
- Debt and Hidden Liabilities. Obligations sitting outside the balance sheet, from deferred maintenance to unrecorded accruals.
Who We Help
Is This Right for Your Acquisition?
Appletree's Quality of Earnings and Financial Due Diligence work is built for buyers across the lower middle market.
Search Funds
SBA Buyers
Acquisition Entrepreneurs
Private Equity
Independent Sponsors
Strategic Buyers
Business Buyers
Lenders & Investors
Appletree specializes in business acquisitions with purchase prices typically between $1M and $15M, the sweet spot for Search Funds, SBA Buyers, Acquisition Entrepreneurs, and Lower Middle Market Private Equity firms.
Buy-Side and Sell-Side Engagements
Appletree works both sides of a transaction, though the questions differ considerably depending on which seat you occupy.
Buy-Side Due Diligence
You are underwriting someone else’s numbers on a deadline, usually with a lender and an investment committee waiting on the answer.
Appletree tests the seller’s earnings, identifies the adjustments that survive scrutiny, and gives you a defensible basis for the price you offer or the terms you reopen.
Sell-Side Due Diligence
Preparing your own financials before a buyer’s advisors arrive puts you in a stronger position at the table.
We identify the adjustments that support your valuation and surface the issues a buyer’s team would raise, which gives you time to address them rather than concede on them under deadline.
Our Process
Our Financial Due Diligence Review Process
A clear, defined process from first call to final report, you'll always know exactly where things stand.
Initial Consultation
We learn about your acquisition, deal timeline, and what you need from the engagement.
Document Request
We send a structured request list to gather the seller's financial records.
QOE Analysis
Our CPAs dig into revenue, EBITDA, working capital, cash flow, and risk factors.
Report & Scorecard
We deliver your QOE Report and the Appletree Acquisition Scorecard with clear findings.
Findings Review
We walk through the report, answer questions, and give practical recommendations.
Why Appletree
Why Buyers and Owners Work With Appletree
100+ Quality of Earnings and Financial Due Diligence engagements - purpose-built for the lower middle market, not corporate M&A.
More Than 100 Engagements
Appletree has completed over 100 quality of earnings and financial due diligence projects, concentrated in the lower end of the market rather than spread thinly across every deal size.
Built for $1M to $15M Deals
The firm works in the range where informal bookkeeping, irregular owner compensation, and commingled personal expenses are the norm rather than the exception.
Search Funds, SBA Buyers and Sponsors
Buyers acquiring a single company they intend to run, plus the lenders and investment committees who need earnings support in a form underwriting accepts.
CPAs Who Have Bought Businesses
The people running your diligence have sat on your side of a purchase agreement, so the report answers operating questions as well as accounting ones.
Findings You Can Act On
A written report with every adjustment laid out and the reasoning attached, so your counsel and your lender can follow how each number was reached.
Typically 20 to 50% More Affordable
Appletree prices below large regional CPA firms for comparable scope, which matters when diligence costs come out of the buyer’s own pocket before any deal closes.
Traditional CPA Firms
Generic, templated reports
Built for large corporate transactions
Higher fees, less accessible
Limited real acquisition experience
Technical reports that are hard to interpret
The Appletree Difference
- 100+ Quality of Earnings and Financial Due Diligence engagements
- Designed for $1M–$15M business acquisitions
- CPAs who have personally acquired businesses
- Clear, actionable reports you can actually use
- Typically 20–50% more affordable than large regional firms
Community Partners
Trusted by Business Buyers From
Many of our Quality of Earnings clients come from some of the most respected communities in small business M&A.
Industry Recognition
Featured On Leading M&A Podcasts
Our team has also been featured on respected podcasts focused on business acquisitions, search funds, and the lower middle market.
Testimonials
Here’s What Our Clients Have to Say
The Appletree team is great. I've used them for multiple services, QOFE to bookkeeping, and the experience has been top notch. Everyone from the accounting team to the owner is invested in our success. I'd recommend them to anyone buying and/or running a small business. I almost want to buy another business just to go through the Appletree experience again.
Grayson PhillipsAppletree put together a fantastic QoE on my recent deal. Devin is thoughtful and thorough in his work. The report was detailed, and he walked me through all the fine points and lent his expertise, allowing me to move forward confidently. Patrick has a great team!
Grania MichelKarley and her team have been instrumental in due diligence and business structure during acquisition. They have since assisted in accounting and bookkeeping after purchase and I would highly recommend all these services.
AK MACHINE FABThe team at Appletree were incredibly helpful after an acquisition. In particular, they helped unearth important issues that I would have otherwise missed. Service has been fantastic and we are very happy.
Irving ChenAppletree helped me with the acquisition of my business and were very supportive throughout. Setting up accounting and payroll was much more manageable with their assistance. Would absolutely recommend them for any accounting services or support you need.
Will McClain
Frequently Asked Questions
An audit expresses an opinion on whether historical financial statements comply with accounting standards. Financial due diligence asks a different question, which is whether reported earnings will continue under new ownership. Appletree analyzes the quality and sustainability of earnings rather than issuing an opinion on the statements themselves.
Timelines depend on the size of the business and how quickly the seller produces documents. Most engagements run a few weeks from the document request through the findings review. Appletree sets the schedule against your closing date at the initial consultation, before you commit to the work.
Yes. Appletree delivers financial due diligence remotely for transactions across the country, working from accounting files, bank records, and management interviews. Geography rarely changes the analysis, though industry and deal structure both change it considerably.
Appletree issues a single consolidated request covering financial statements, tax returns, payroll records, receivable and payable detail, and supporting schedules. We keep that list to what the analysis genuinely requires, since every additional request costs the seller patience and costs you time.
Yes. SBA financed transactions run on a credit process with fixed dates, and we scope engagements to meet them. Give us the lender’s deadline at the consultation, and Appletree will confirm the timeline before the engagement begins.
You receive a written report containing an executive summary, an EBITDA bridge showing every adjustment made, an assessment of revenue and cash flow quality, a working capital and hidden liability analysis, and the Appletree Acquisition Scorecard. We then review the findings with you directly.
Related Services
Due diligence rarely stands alone. Buyers and owners usually need earnings analysis before a deal closes, transaction support while it moves, and steady financial management once the business changes hands.
Mergers and Acquisitions
Quality of Earnings Report
Bookkeeping Services
Outsourced CFO Services
Business Consulting
Tax Services
Start Your Due Diligence Engagement
A transaction moves on someone else’s schedule, and the diligence has to keep pace with it. Appletree can scope an engagement in a single conversation, working backward from your closing date and whatever your lender requires.
Schedule a consultation to walk through the transaction and receive a scope, a timeline, and a fee for the due diligence.
Schedule Your Free Consultation Today
Get bookkeeping, payroll, tax, and advisory support from a proactive team that understands electrical contracting and the unique financial challenges your business faces.