Quality of Earnings

Evaluating complex investment opportunities.

Capital markets are complex and fluid, often changing in very dynamic ways over compressed business lifecycles and time frames. These dynamics tend to demand the use of third-party professionals in evaluating potential investment and loan transactions.

Investors and lenders of all types are faced with the prospect of making investment decisions in increasingly complex environments, often with limited internal resources and shorter time frames to close a transaction. With over 35 years of transactional experience, Phoenix understands each client’s unique situation, allowing for the simplification of complex business operations and overall facilitation of investment processes.

The Quality of Earnings report works as a stand-alone engagement or as part of the Quality of Enterprise® assessment, providing the expertise needed for a comprehensive evaluation of various enterprise transactions and engagements.

Phoenix has many investor-related clients that require insight into potential acquisition targets that go beyond the traditional Quality of Earnings report. In hand, Phoenix has developed a transaction advisory approach, QofEPlus+, which provides operational and organizational insights into complex investment situations.

Our Quality of Earnings review includes the following service offerings:

  • Determine allotted resources and time for the engagement
  • Evaluate potential investment and loan transactions with each unique client
  • Provide operational and organizational insights into complex investment situations

Our clients comprise a variety of capital providers, each with their own unique transaction insight requirements, such as:

  • Private equity investors seeking insight into the quality of the earnings, synergy evaluation, and management capabilities.
  • Senior asset-based lenders whose credit committee desires clarity and an in-depth understanding of the potential borrower’s operations.
  • Mezzanine lenders whose underwriting demands an understanding of the risks of the borrower’s potential enterprise value.
  • A blend of senior, mezzanine, and private equity investors requiring insight not only for the historical earnings, but also a clear sense of what the financial performance of the “target” company is likely to be and what the risks and possible upside opportunities may be.
  • Unitranche lenders whose transactions will incorporate multiple positions on the balance sheet, each with its own risk assessment, and thus, structure and pricing requirements.
  • Hedge funds considering the purchase of debt instruments and seeking visibility into the company’s operations, the steps necessary to maximize future performance, and potential risks.

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