We are preparing for a sell-side Quality of Earnings audit and want to prove that our custom AI scheduling tool has permanently reduced our headcount requirements by five full-time employees. How do we structure this run-rate adjustment so the buyer's auditors accept the pro forma EBITDA uplift?

Question

Tyler Smith · Accepted Answer

Sell-side Quality of Earnings audits are all about proving the sustainability of your earnings. If you have permanently reduced your operating expenses through AI automation, you are entitled to a run-rate adjustment that reflects these savings as if they occurred at the beginning of the trailing twelve-month period.

To get the buy-side auditors to accept this adjustment, you must provide clear, objective proof of both the operational change and the financial savings.

First, show the historical payroll records demonstrating that those five specific positions have indeed been eliminated. You cannot make a run-rate adjustment for headcount you merely plan to cut; the cuts must have already occurred.

Second, map out the workflow changes. Show the auditors how your custom AI tools have taken over those specific administrative responsibilities. Use your EOS Accountability Chart to show the updated roles and responsibilities, proving that the remaining team is not overloaded and that the automation is sustainable.

By documenting the exact tasks, the date of termination, and the automated solution that replaced them, you convert a vague estimate into an undeniable historical fact. This adds hundreds of thousands of dollars to your normalized EBITDA, which multiplies directly into your final purchase price.