You can't see what you're buying.
The QoE says the earnings are real. The attorney says the contracts hold. Nobody has told you whether any of it survives the day the owner hands you the keys.
The financial side of diligence has a standard: a Quality of Earnings report, which the SBA now requires on certain 7(a) acquisitions at $3 million and up. It answers whether the earnings are real. The operational side — does this business run without the person selling it? — has been left to management interviews and judgment. Good judgment, often. But not a published standard with a written gate for each thing that has to be true, and not a signed answer you can put in the file. Now there is one. Here's what the SBA rule requires, and what it doesn't.
The Standard Report
A written assessment of the business against the twelve published gates of the Small Business Standard™ — delivered between LOI and close, in fifteen working days, signed by the Architect who did the work.
| EE | Element | Evidence cited | Dated | State |
|---|---|---|---|---|
| EE1 | Clarity | One-page definition v3; three non-founder interviews | 08/26 | MET |
| EE2 | Financial Visibility | Account structure; 60 days of allocations; weekly review log | 08/26 | MET |
| EE3 | Profit Discipline | Profit target present; margin by offer not calculated | 08/26 | NOT MET |
| EE4 | Operating Cadence | Leadership Weekly, 7 of 8 weeks; all founder-facilitated | 08/26 | NOT MET |
| EE5 | Role Clarity & Accountability | Chart signed and displayed; five decisions traced | 08/26 | MET |
| EE6 | Founder Dependency Reduction | Dependency audit requested; no record exists | 08/26 | NOT EVIDENCED |
| EE7 | Core Process Documentation | Three processes; transfer test stalled at step 4 | 08/26 | NOT MET |
| EE8 | Marketing System | Lead log 12 mo; publishing record; two referral partners | 08/26 | MET |
| EE9 | Sales System | Pipeline export; 0 of 14 closes by a non-founder | 08/26 | NOT MET |
| EE10 | Customer Retention System | Concentration 31% top client; churn tracked | 08/26 | MET |
| EE11 | People & Culture Foundation | Values stated; hiring process undocumented | 08/26 | NOT EVIDENCED |
| EE12 | Delivery & Quality | Promised outcome per offer; checklists in use; defect log | 08/26 | MET |
| EE4 | Non-founder facilitator; eight weeks | M | Team |
| EE6 | Dependency audit; one delegation, 60 days | L | Team · SBS |
| EE7 | Document the approval; re-run the test | S | Team |
| EE9 | Sales process; one close by a teammate | M | Team · any operator |
- No averaging. A gate is passed or it isn't.
- NOT EVIDENCED means the record doesn't exist. It is never softened into a pass.
- An example of the format. Click the page to enlarge it.
- Twelve verdicts. Each element MET, NOT MET, or NOT EVIDENCED — with the evidence cited and dated. No score. No average. A gate is passed or it isn't.
- The owner-dependency exposure, on one page. Who decides, who knows, who owns the relationships, and what happened the last time the owner was gone two weeks — asked of three people and quoted.
- The remediation map. Every open gate: what it takes to close, how long, and who can do it — your team, us, or any competent operator. A number you can take to the price conversation, the lender, and the transition plan.
Four numbers set the scope: operating entities, locations, people, and distinct revenue lines. Any one over its line moves the scope up. The scope locks the day the data room opens.
Never contingent on the findings, the deal, or anything we might sell you later. The Report is worth its fee if you never call us again.
See the scope and the price in twenty seconds.
Flat, paid at engagement, never contingent. Add-ons priced at the same scope. Priced by the business, not by the deal.
Go deeper where the file can't.
Retention and flight-risk interviews with every named key person. Who leaves when the owner does.
Concentration, churn, and relationship ownership across the whole book. Which revenue is the owner's, not the business's.
A named person who has never run a core process runs it from the documentation, witnessed and recorded.
The Report and all three. The whole operating picture, in one signed document.
Add-ons are priced at the scope of the business underneath: list price through Extended, 1.5× at Multi-site, quoted at Full. Every price is fixed before the work starts.
How it goes.
Thirty minutes on the deal: what the LOI allows, what you most need to know, whether the Report is the right instrument.
The data room as it exists, the seller, and two people who aren't the seller. Fifteen working days from the day the room opens.
Twelve verdicts, the exposure page, the map — and one read-out call to walk it with you.
The questions buyers ask first.
From $15,000, flat, by the scope of the business — not the size of the deal. Four numbers set the scope and it locks the day the data room opens.
Fifteen working days from data-room access. The clock is in the contract, and it pauses if the room is late.
The data room as it exists, ninety minutes with the seller, and forty-five each with two people who aren't the seller. Nothing has to be created for it.
No. A QoE says whether the earnings are real. This says whether they survive the owner leaving. The two sit side by side in the file.
You, and whoever you choose — your lender, your attorney, your partners. It's signed and dated, so it stands on its own in the file.
The Report is yours. It's paid at engagement and never contingent on the deal, the findings, or anything we might sell you later.
You'll interview the team and read the customer list either way. The difference is whether the answer is a feeling in the room or twelve verdicts with the evidence attached.
Verified against a published standard. Not a certification, not a valuation, not a QoE — the document that sits beside them. Small Business Standard™ Certified is a separate mark, not yet awarded to any business.