In this episode of The Transaction Abstract Podcast, Joe Hellman sits down with Nonye Thompson, Managing Director in Redpath's Transaction Advisory Services practice, to break down one of the most important, and often misunderstood, components of the deal process: the Quality of Earnings (QoE). 

Drawing from years of experience leading buy-side and sell-side diligence engagements for transactions ranging from $5 million to over $1 billion, Nonye explains what a QoE actually is, why it matters, and how it helps both buyers and sellers make smarter, more confident decisions.

While many first-time buyers focus on net income or cash flow, EBITDA is the most common metric used in M&A. As Nonye explains, what really matters is the reliability and sustainability of those earnings, and that's exactly what a QoE uncovers.

A QoE evaluates whether EBITDA is:

• Reported correctly (cash vs. accrual)
• Driven by recurring operational activity rather than one-time events
• A true reflection of ongoing business performance

The goal is to understand whether the profit is real, repeatable, and transparent. It's not just about how much EBITDA a company generates. It's about how the EBITDA is created.

Listen to the full episode of The Transaction Abstract Podcast to hear Nonye Thompson and Joe Hellman share more real-world examples and insights into how QoEs shape better, smarter transactions.