"Trust, But Verify" Is Overrated
It's time to draw a line in the sand
I think that the phrase “Trust, but verify” is a bit overrated. It should really be trimmed down to just “Verify.”
In my line of work, one of the biggest sources of delay tends to be a lack of direct access to the seller’s data. For whatever reason (usually not a great reason, if I’m being honest), the seller thinks that it’s enough for me to trust that what they’ve sent is enough for me to do all my verifying work.
Rather than giving me access to their QuickBooks, I’m forced to rely on unformatted PDFs, incorrect exports, or curated reports to do my work. As all this rolls downhill, the buyer is left with making a decision that relies on this potentially incomplete data.
I have a very simple proposal for this problem.
No buy-side QoE without direct access to the accounting system.
There are roughly 20 or so QoE providers who work on sub-$5M revenue deals. We’ve run into the same inefficiencies over and over again, and we know the pattern. I think it’s time for us to come around a single rule to set an industry standard.
What would change with the new rule
With the way things go now, there’s usually a circus show of emails and requests flying back and forth that ends up with incomplete data. I’ve spent weeks chasing down information that could have been downloaded from QBO in a few minutes. Rather than a clean, efficient QoE process, we’re stuck in a frustrating slog, which doesn’t bode well for closing deals. The ABCs are to always be closing, not always be CC’ing more people for access.
And yet, we keep accepting it as QoE providers. I think if the ~20 of us who consistently work these deals aligned on this issue, the problem would disappear overnight. By not providing buy-side QoE’s without direct access to the accounting system, we would avoid dealing with PDFs, reconstructed financials, and unnecessary delays.
Also, if buyers, brokers, and sellers knew this was the standard across providers, their behavior would change immediately. By setting clear expectations from the beginning and holding everyone to a standard, we’d be creating a more efficient and effective operating procedure in an industry that is fairly new and unregulated.
The Rule Part Two: Electric Boogaloo
If we’re not willing or able to hold that line, then we should at least price in the inefficiency. There should be a premium added when sellers choose the “no access, just trust us” route. Due to the additional friction, both the buyer and seller should be willing to front the fees that reflect the manual workload. The delays and inefficiencies have serious opportunity costs, let alone all the headaches they bring.
This should not be a controversial idea, especially because of its reach.
Lawyers would be supportive because better access to data reduces delays and helps deals close faster. Brokers would benefit from the shorter LOI timelines and smoother processes. Last but not least, buyers get higher confidence and fewer surprises.
A Call to Action
For buyers and advisors, implementing this change starts with one simple step:
Require direct access to the accounting system in the LOI.
Make it clear that summaries, PDFs, and hand-selected reports are not enough. Direct access is the only acceptable way to do a deal. Once you set the expectation early, the rest of the process becomes significantly more efficient. If this is something you’re interested in learning more about, feel free to set up a call with me or check out our website for more about how we do things at QoE Prep.