How do we best focus on “quality” in quality of earnings reports?
Whether you need sell-side or buy-side representation, our expertise ensures that our Quality of Earnings reports go beyond the traditional assessment of the sustainability and accuracy of historical earnings and achievability of future projections.
Quality Issue #1: What Drives EBITDA?
Examine the key value drivers of sales growth and profit margins to determine what really drives and impedes EBITDA. Understanding these and any other value drivers requires an in-depth analysis of their contributing elements. This can be illustrated using a generic products company.
Quality Issue #2: Test the Business Plan Assumptions
Test the earnings sensitivity to changes in operating and financial parameters. Testing needs to reflect:
- Key metrics that drive growth and profitability
- Cyclicality of sale and inventory
- buildup
- Working capital needs
- Capital requirements
- Tax assumptions
- Returns to shareholders
Quality Issue #3: Balance Sheet Review for Potential Effects on Profits
Review the balance sheet for anything relevant in understanding the company’s past and future performance. Such as:
- Atypical working capital
- Inventory turn and obsolescence
- Receivables issues
- Vendor payables and accruals
Quality Issue #4: Funding Capacity, Leverage, and Financial Structure
Review the business’ funding capital structure, return on debt and equity, and income taxes. The following areas must be examined:
- Cash reserves and borrowing facilities
- Borrowing costs
- Debt service and covenants
- Cyclical funding needs
- Financial leverage risk
- Taxation
- Returns to shareholders
For more information about how we can be of assistance, please contact one of the professionals listed below.
How Marshall & Stevens can help with Quality of Earnings
Our Quality of Earnings team collaborates with our internal multi-disciplinary professionals to provide the value analyses and fresh independent opinions to fiduciaries, financing sources and investors for public and private company transactions.
Real Estate Valuation
Attorneys, accountants, wealth managers and financing sources refer their clients to Marshall & Stevens because we deliver high-quality work through an insightful, service-oriented approach.
Fairness Opinions
A Fairness Opinion from a disinterested valuation firm provides decision makers with an independent analysis of the transaction, unbiased by commissions and other potential conflicts.
Machinery and Equipment
Our Machinery and Equipment valuation professionals spend the time necessary to provide reliable analyses.
Frequently Asked Questions
The Marshall & Stevens Difference
Marshall & Stevens provides Fairness and Solvency Opinions, valuation analyses, investigative accounting, and expert witness services to assist public and private clients with their important transactions and litigation matters.
- 11 offices
- over 200 employees
- 26 Unique Professional Certifications
- 8 firms acquired since 2023
- 93 years (founded 1932)
- over 55 staff with tenure of 9+ years
Client Highlights
Here are a few client success stories from public and private companies we’ve worked with
Intangible Asset Valuation Contacts at Marshall & Stevens
Background
Martin Hanan is a Managing Director with 40 years of business valuation, transaction and business economics consulting experience. He was the founder and President for ValueScope, and joined Marshall & Stevens in 2024, with their acquisition of ValueScope. He works primarily in transaction advisory and financial valuation.
Having created two industry-leading firms, Mr. Hanan has managed hundreds of engagements for other professional advisors, and government and corporate clients in a wide array of industries.
Mr. Hanan’s expertise includes the valuation of closely held business interests, financial derivatives, and intellectual property; governance issues including executive compensation; and financial and tax reporting issues including transfer pricing, transactional assistance and methods designed to accelerate corporate cash flow and value.
Mr. Hanan’s strengths include deep insight into econometrics, theory and methodology, business appraisal, and empirical analysis. He is highly analytical, quantitative and creative, and utilizes these skills in assignments ranging from value measurement to value harvesting to expert testimony.
Professional Highlights
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- Dallas Society of Financial Analysts
- Beta Gamma Sigma Alumni - Dallas Chapter
- Scale Marketing LLC, Director
- Director, Project Chimps (non-profit)
- Former Director, Einstein Noah Bagel Corp.
- Former Director, Luna Carpet, Inc.
- Former Director, Board of Trustees, Alliance for Higher Education / North Texas Regional Center for Innovation and Commercialization
- ValueScope, Inc.
Founder and President, 2001-present - Business Valuation Services, Inc.
Founder and President, 1987-2000 - H.D. Vest Business Valuation Services, Inc.
President, 1987 - Touche Ross & Co.
Senior Manager, Valuation Engineering and Appraisal Services, 1986-1987 - Arthur D. Little Valuation
Manager, 1983-1986 - Motorola Govt. Electronics Group
Design and Manufacturing Engineer, 1978-1982
Background
Ben Westcott is a Director with more than a decade of experience working in financial valuation. He joined Marshall & Stevens in 2024 with the acquisition of ValueScope.
Mr. Westcott performs advanced financial analysis and business appraisals, prepares written reports, presentations, and provides advisory services for clients. During his time with ValueScope, Mr. Westcott has specialized in business valuations, mergers and acquisitions, fairness opinions, and valuations of complex securities.
Prior to joining Marshall & Stevens, Mr. Westcott received his MBA from Texas Christian University where he served as the head of the William C. Conner Investment Fund. Mr. Westcott has significant experience within the hospitality, food and beverage, and retail industries. Mr. Westcott also spent time with a local endowment fund where he worked with numerous private equity, hedge fund, debt, and venture capital fund managers.
Professional Highlights
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- CFA Society of Dallas-Fort Worth
- Beta Gamma Sigma
- Association of Corporate Growth
- ValueScope, Inc.
Senior Manager, 2015-present - Cook Children's Endowment Fund
Investment Analyst, 2014-2015 - Neeley & Associates Consulting
Management Consultant, 2013-2014
Relevant Insights
Quality of Earnings Studies
Solvency Opinion Summary Guide
