STOCADVISORY
SELL-SIDE QOE | DATA-ENABLED DILIGENCE | CONSUMER SERVICES
STOC Advisory provides sell-side Quality of Earnings (QoE) and deal readiness support for investment banks executing consumer services transactions. Our data-enabled approach validates unit economics, corroborates management narratives with external data, and preemptively answers buyer questions—improving process quality, accelerating close timelines, and increasing buyer confidence.
Investment banks need sell-side diligence that strengthens buyer confidence without overcomplicating the process. STOC's consumer services expertise focuses on unit economics validation, location performance analysis, and customer retention metrics—the exact areas buyers scrutinize most in fitness, beauty, hospitality, education, childcare, and other consumer-facing businesses.
Recent Transaction: Multi-Location Fitness Chain
Completed sell-side QoE for 18-location fitness concept (38K members, $22M revenue). Validated LTV/CAC metrics (2.8x ratio), normalized deferred revenue treatment, corroborated member retention (68% annual) using external web traffic and review data. Buyer completed diligence in 4 weeks with minimal follow-up questions. Transaction closed at 8.2x normalized EBITDA.
SELL-SIDE QOE
Unit economics, location performance, margin validation
DATA ENRICHMENT
External validation using web data, reviews, analytics
45+
Consumer Services
Sell-Side QoEs
5-7 Days
Preliminary Findings
Delivery
Web-Enabled
External Data
Corroboration
2-3 Weeks
Final QoE Report
Turnaround
1
Revenue Quality & Unit Economics Validation
Analyze revenue streams by location, membership type, and customer cohort. Validate unit economics (LTV/CAC, payback periods, retention rates) and normalize one-time or non-recurring revenue sources.
2
Customer & Location Performance Analysis
Evaluate location-level P&Ls, customer acquisition trends, and cohort retention curves. Identify underperforming locations, churn risks, and growth drivers that buyers will scrutinize during diligence.
3
Margin Normalization & Add-Back Validation
Develop normalized EBITDA with defensible add-backs (owner compensation, non-recurring costs, growth investments). Benchmark margins against industry standards to support valuation credibility.
4
Working Capital & Cash Flow Transparency
Analyze deferred revenue (prepaid memberships), gift card liability, and A/R aging patterns. Set realistic working capital targets that won't surprise buyers during final diligence or at close.
5
Data-Enabled Deal Readiness
Leverage external data sources (web traffic, Yelp/Google reviews, social media engagement, location analytics) to corroborate management narratives and preemptively answer buyer questions about brand strength.
6
Buyer Q&A Anticipation
Prepare comprehensive diligence materials that anticipate buyer questions on customer retention, competitive positioning, growth sustainability, and operational scalability—reducing follow-up rounds and accelerating close.
Transaction Example: Boutique Salon Chain
14 locations, $18M revenue, private equity buyer. Key QoE deliverables: (1) Validated stylist retention at 78% annually (industry benchmark: 65%), (2) Normalized owner comp + personal expenses ($420K adjustments), (3) Corroborated customer sentiment using 4,800+ online reviews (4.6★ avg), (4) Analyzed prepaid service packages ($1.2M deferred revenue liability). Buyer Q&A follow-up: 3 questions total. Transaction closed in 8 weeks.
STOCADVISORY
SELL-SIDE QOE | DATA-ENABLED DILIGENCE | CONSUMER SERVICES
Our sell-side financial due diligence services for investment banks include: Quality of Earnings (QoE), normalized EBITDA development, working capital analysis, unit economics validation, data enrichment using web scraping and location analytics, and buyer Q&A preparation materials. We deliver clean, defensible reports that accelerate buyer confidence and close timelines.
Buyer Confidence Through External Validation
Investment banks need sell-side diligence that strengthens buyer confidence without overcomplicating the process. STOC's consumer services expertise focuses on unit economics, location performance, customer retention, and margin sustainability—the exact areas buyers scrutinize most. Our data-enabled approach corroborates management representations using external sources, reducing buyer follow-up questions and accelerating close.
💡
UNIT ECONOMICS
LTV/CAC validation, cohort retention, payback periods
📍
LOCATION ANALYSIS
Site-level P&Ls, traffic patterns, market positioning
🔍
DATA VALIDATION
External corroboration using web traffic, reviews, social
Sell-Side QoE: Children's Education Centers
22 locations across 4 states, $32M revenue, strategic buyer. Deliverables: (1) Validated enrollment capacity utilization (avg 82% vs. management's 85%), (2) Analyzed teacher wage inflation (+9% YoY, justified by market benchmarking), (3) Normalized curriculum development costs ($280K one-time investment), (4) Corroborated parent satisfaction using 3,200+ Google reviews (4.7★ avg), (5) Assessed lease renewal risk (6 locations expiring within 24 months). Normalized EBITDA: $4.6M vs. management's $5.1M. Transaction closed successfully at 9.5x.
Consumer-facing business expertise
- Fitness & wellness (studios, gyms, boutique concepts)
- Beauty & personal care (salons, spas, med spas)
- Hospitality (restaurants, quick-service, fast-casual)
- Education (tutoring, test prep, early childhood centers)
- Pet services (grooming, boarding, veterinary)
- Entertainment & recreation (trampoline parks, family entertainment)
- Senior care & home care (non-medical, companion services)
External validation and buyer confidence
- Web traffic analysis (Google Analytics benchmarking)
- Review sentiment analysis (Yelp, Google, Facebook aggregation)
- Social media engagement tracking (follower growth, engagement rates)
- Location analytics (foot traffic proxies, demographic validation)
- Competitive positioning (market share estimates, pricing benchmarks)
- Brand strength indicators (search volume, online presence)
- Customer sentiment validation (NPS corroboration, churn indicators)
Representative Consumer Services Transactions
Fitness: $22M boutique fitness (18 locations), $8M yoga studio chain (6 locations), $5M CrossFit franchise (3 boxes)
Beauty: $18M salon chain (14 locations), $6M med spa concept (4 locations), $4M nail salon franchise (8 locations)
Education: $32M children's learning centers (22 locations), $12M tutoring franchise (18 centers), $7M test prep business
Key Diligence Focus Areas: Member/customer retention curves, location-level unit economics, prepaid service/membership liability treatment, owner compensation normalization, lease structures and renewal risk, seasonal revenue patterns, competitive market positioning
Why Investment Banks Choose STOC for Consumer Services: Traditional sell-side QoE providers focus on GAAP adjustments and financial normalization. STOC goes further by leveraging external data sources to validate management's narratives—corroborating customer retention claims, competitive positioning, and brand strength using web analytics, reviews, and location data. This approach reduces buyer follow-up questions, accelerates diligence timelines, and increases transaction certainty. Our consumer services expertise means we understand unit economics, location performance drivers, and the operational realities of scaling consumer-facing businesses across multiple sites.