Proof of Cash Case Study: A Searcher’s SBA Acquisition the Numbers Did Not Support

Short answer: A searcher, an entrepreneur buying a company through entrepreneurship through acquisition (ETA), was acquiring a multi-brand vending company and had a U.S. Small Business Administration (SBA) lender with underwriting questions about the seller’s books that nobody could answer. QoEAgent built a proof of cash, rebuilt 46 months of monthly cash-basis balance sheets and income statements (January 2022 through October 2025), and found that year-end 2024 revenue and cost-of-sales deferrals documented by the seller’s certified public accountant (CPA) had never been recorded in the general ledger. The verified numbers did not support the seller’s price, the lender could not underwrite it, and the searcher walked away before closing rather than after.

This is one engagement, described with the client’s written permission. The target company and seller are not named, and identifying details are left out, because the other side of the deal never agreed to be part of our marketing.

The situation

Matt Wolfe, a searcher in Colorado Springs, Colorado, was buying his first company through ETA: a multi-brand vending company, financed through an SBA lender. The deal had stalled in underwriting. His lender had questions about the seller’s financial records, and neither the seller nor the seller’s advisors could answer them in a form the bank could rely on.

The problem

The seller had migrated its accounting from QuickBooks to Odoo partway through the period under review and could not produce standard bank reconciliations. A system migration like that tends to break continuity: account mappings change, opening balances get re-keyed, and the history on each side of the cutover no longer lines up. Earnings built from those books could not be tested against anything independent.

What we did

• Started from the bank. A proof of cash reconciles cash receipts and disbursements on the bank statements to the revenue and expenses in the books. Bank statements do not change when accounting software does, which made them the one consistent record across the migration.
• Defined exactly what the seller had to produce and held the seller to it through weekly diligence calls.
• Rebuilt the financial statements. Monthly balance sheets and income statements, January 2022 through October 2025, on one consistent cash basis, so the periods before and after the migration could be compared.
• Delivered a workbook the lender could use directly. It went from us to the buyer’s lender.

The engagement was led by Ron Neufeld, CPA and Accredited in Business Valuation (ABV), and Josh Cashman, Chartered Financial Analyst (CFA) and Accredited Senior Appraiser (ASA). At QoEAgent, credentialed professionals own every conclusion; software does the extraction and matching.

What we found

The seller’s CPA had documented year-end 2024 deferrals of revenue and cost of sales. Those entries were never recorded in the general ledger. The CPA’s statements and the company’s own books therefore told two different stories about the same year, and the lender was underwriting from the books.

Left unchecked, that gap would have distorted the earnings the lender was relying on. It is the kind of difference that a review of the CPA’s statements alone does not surface, because the statements look correct. It only shows up when the ledger, the CPA’s workpapers and the bank are tied to each other. For how we decide which adjustments hold up, see quality of earnings adjustments.

The outcome

The deal did not close. On verified numbers, earnings did not support the seller’s asking price, and the lender could not underwrite the loan at that price. The buyer walked away before closing.

That is what due diligence is for. A diligence engagement is not measured by whether the deal closes; it is measured by whether the buyer and the lender make the decision on numbers they can trust. Every engagement is different, and what we find depends on the seller’s records.

In the client’s words

“My SBA lender had questions about the seller’s books that no one could answer. Ron Neufeld and Josh Cashman of QoEAgent built a proof of cash and nearly four years of monthly cash-basis financials, and surfaced accounting adjustments that had never been recorded in the ledger. Their work gave my lender and me a verified view of earnings, and the confidence to walk away when the price did not hold up. Every buyer using SBA financing should have this team in their corner. I recommend them without reservation.”

Matt Wolfe, Business Buyer, Colorado Springs, CO

Quoted in full from Matt Wolfe’s signed letter of October 13, 2026, and published with his written permission.

Why this matters for searchers and ETA buyers

A searcher usually buys one company, with SBA financing and their own capital at risk, and without a deal team to test the seller’s numbers. The cheapest moment to find out the earnings are not there is before closing. QoEAgent works with self-funded and funded searchers, independent sponsors and the SBA lenders who finance them: a proof of cash in 24 hours, GAAP-formatted financials in 48, and a full quality of earnings when the deal needs one.

What this means for SBA buyers and lenders now

This engagement was completed before the October 1, 2026 technical update to SOP 50 10 8.1. Under the current rule, a quality of earnings (QoE) report “must not be prepared by or for the seller,” and a lender “may not rely upon a QoE report prepared by another party without a review being performed by one of their vendors.” A buyer can still commission diligence of their own, as Matt did, and it can still reach the lender. But the lender must have it reviewed by one of its own approved vendors, and the review findings go in the loan file alongside the original report.

What the current rule requires, and what the report must contain, is covered in SBA quality of earnings, what an SBA cash proof must contain, and who can prepare an SBA QoE report. The full text of the rule is summarized at SOP 50 10 8.1.

Frequently asked questions

What does a proof of cash show in an acquisition?

It shows whether the revenue and expenses in the seller’s books are backed by cash that actually moved through the bank. Cash receipts and disbursements on the bank statements are reconciled, period by period, to the income statement. Where they do not tie, the difference has to be explained. How it differs from a bank reconciliation.

Why would a CPA’s year-end adjustments be missing from the general ledger?

An outside accountant often records year-end adjustments, such as revenue or cost-of-sales deferrals, in their own workpapers or in the financial statements they prepare, without those entries being posted back to the company’s books. The CPA’s statements and the ledger then disagree, and anyone underwriting from the ledger sees different earnings than the CPA reported.

How do you do diligence when the seller changed accounting systems mid-period?

Work from the bank statements, which do not change when the software does, and rebuild the financial statements on one consistent basis across the cutover. In this case that meant monthly cash-basis statements from January 2022 through October 2025.

Should a searcher get a quality of earnings before an SBA acquisition?

Yes. Buyer-side diligence is how a searcher tests whether the seller’s earnings are real before committing equity. For SBA 7(a) acquisitions with a purchase price of $3 million or more, SOP 50 10 8.1 also requires a QoE for the lender. A searcher’s own QoE can reach the lender, but the lender must have it reviewed by one of its approved vendors.

Can an SBA lender rely on a quality of earnings the buyer commissioned?

Not on its own. Since the October 1, 2026 technical update to SOP 50 10 8.1, a buyer-commissioned QoE can reach the lender, but the lender may not rely on it without a review by one of its own approved vendors, and the findings of that review must be included in the loan file. A QoE prepared by or for the seller cannot be used.

Is a deal that does not close a failed diligence engagement?

No. Diligence exists so the buyer and the lender decide on verified numbers. When verified earnings do not support the price, renegotiating or walking away before closing is the engagement doing its job.