The buyer's Quality of Earnings firm is arguing that our historical marketing spend was unsustainably low and is attempting a pro-forma adjustment to lower our EBITDA. How do we defend our actual financial track record?

Question

Tyler Smith · Accepted Answer

Quality of Earnings firms are hired by buyers to find reasons to chip away at your valuation. A common tactic is proposing a pro-forma adjustment by claiming your historical operating expenses were artificially low. They might argue you underpaid yourself, understaffed a department, or underinvested in marketing.

To defeat this, you must shift the debate from theoretical industry averages to hard operational realities. If your marketing spend was low, it is not because you were starving the business. It is because you built a highly efficient client acquisition engine. You need to present your customer acquisition cost and customer lifetime value metrics. Prove that your marketing efficiency is a permanent competitive advantage, not a temporary cash-saving trick.

Show them your V/TO® and your documented marketing processes. Demonstrate how your leadership team utilizes the EOS® Scorecard to track lead flow and conversion rates weekly. This level of operational rigor proves your margins are real and repeatable.

Remind the buyer that they are buying your actual operational system, not a generic industry average. If they want to spend more on marketing post-acquisition to accelerate growth, that is their investment decision, not a historical expense that should reduce your purchase price. Stand firm on your actual cash flow. Your EBITDA is what you achieved, not what a spreadsheet jockey thinks you should have spent.