Private Equity

QoE

Quality of Earnings. An audit-like analysis that strips a company's reported earnings down to durable, recurring profit.

Definition

Performed by accounting firms during both buy-side and sell-side diligence, a QoE report adjusts EBITDA for one-time items, accounting choices, owner perks, and pro-forma adjustments. The result, adjusted EBITDA, is what the deal actually trades on. AI-driven cost savings have to be documented well enough to survive a QoE review to count in the sale price.

Why it matters

If AI savings cannot be evidenced in a QoE workbook, they do not exist as far as the buyer is concerned.

Where Sophizo applies this

Sophizo deploys QoE inside revenue and AI engagements with growth-stage operators and PE-backed portfolios.

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Related terms in Private Equity

EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. The core profitability metric private equity uses to value companies.
IRR
Internal Rate of Return. The annualized return a PE fund generates on the capital it puts to work.
TVPI
Total Value to Paid-In. The total value a fund has created, realized plus unrealized, divided by the capital LPs have contributed.
DPI
Distributions to Paid-In. Cash actually returned to limited partners, divided by the capital they contributed.
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