A quality of earnings review is an independent accounting analysis of whether reported earnings are real and repeatable. Buyers commission one on nearly every deal in this size range, and sellers increasingly commission their own first.
More detail
It is not an audit. The provider tests revenue recognition, tests each add-back, normalizes for one-time items, examines customer profitability, checks inventory valuation, and rebuilds a defensible EBITDA figure. Whatever it finds becomes the basis for the price. A seller-commissioned report, often called a sell-side quality of earnings, costs money up front and typically pays for itself twice: it finds the problems while there is still time to fix or explain them, and it shortens the buyer's own review, which reduces the number of weeks in which a deal can fall apart. For a manufacturing company with inventory, work in process, and percentage-of-completion accounting, it is close to essential.