The DueDilio 2025 lower-middle-market Quality of Earnings analysis is one of the most cited studies in exit advisory selection. The headline finding: no-QoE deals average 4.2x EBITDA at close, while QoE-backed deals average 5.1x. The gap is structural, not accidental. It tracks the work that gets done before the QoE document is finalized: the normalization, the customer concentration audit, the working capital baseline, the addback documentation.
An owner screening exit advisors faces a question that is harder than "do they recommend QoE?" The harder question is whether the advisor's QoE process is the disciplined version that produces the documented uplift, or the perfunctory version that produces a binder.
The Disciplined Version
A disciplined sell-side QoE process runs across the 90 to 180 days before any buyer is approached. It is sequenced, it is staffed with named accountants on the QoE firm's side, and it is integrated with the rest of the pre-process preparation work the advisor is doing. The QoE firm is selected for industry relevance, not just for the lowest fee. The advisor is in the room for the QoE scoping conversation, not handing it off to the QoE firm to define unilaterally.
The discipline shows up in concrete artifacts. A normalization workbook that explicitly identifies and quantifies every owner-comp addback, related-party transaction, one-time expense, and accounting policy choice that affects EBITDA. A customer concentration analysis that maps revenue dependency by customer for the last three years and identifies churn risk. A working capital baseline that establishes the "normal" working capital level the buyer will require at close, not a number negotiated under time pressure during the LOI period.
The published industry standard is documented across multiple sources. The GF Data Resources Small-Deal Resilience H1 2025 report bands multiples by EBITDA size with median lower-middle-market businesses ($1M to $5M EBITDA) trading around 5.5x and businesses in the $10M to $25M range trading 6.2x to 6.7x. QoE-backed transactions consistently sit at the higher end of these bands.
The Perfunctory Version
The perfunctory version of sell-side QoE produces a binder. The binder is technically a Quality of Earnings document. It contains the standard sections: EBITDA reconciliation, normalization schedule, customer concentration table, revenue recognition review. But the work has been done in compressed time, by a firm selected for cost rather than for relevance, with limited integration into the rest of the advisor's pre-process preparation.
The perfunctory version exists because some advisors face the same incentive structure as their clients: they want the engagement to move quickly. A 90-day preparation window with disciplined QoE feels expensive when the alternative is a 30-day "QoE-light" preparation and a faster go-to-market. The advisor who pushes for the shorter window may be optimizing for their own throughput rather than the seller's outcome.
Questions to Ask About the QoE Process
Before signing an engagement letter, an owner can evaluate the advisor's QoE process by asking specific questions. The answers, taken together, distinguish the disciplined version from the perfunctory version.
- Which QoE firm or firms do you typically recommend, and why those firms specifically for businesses in my sub-sector?
- What does the QoE scoping conversation look like, and who is in the room?
- How long does the QoE process take from kickoff to final report, and where in that window do you expect the most preparation work?
- Can I see a redacted example of a QoE engagement you have run, so I can understand the depth of the normalization and customer concentration analyses?
- How does the QoE work integrate with the buyer-lens modeling you will be doing in the same window?
- Where in the process do you typically identify issues that the buyer's diligence team would have identified, and what is your approach to addressing them before going to market?
An advisor who answers all six questions with specifics is describing the disciplined version. An advisor who answers in generalities, who outsources QoE selection to "whoever the client prefers," or who emphasizes how fast the process can move, is describing something closer to the perfunctory version.
A Practitioner View
"The QoE document is a downstream artifact. The value is upstream, in the work the QoE forces the seller to do. When an advisor treats QoE as a downstream deliverable rather than an upstream discipline, the deal compresses at LOI for reasons the seller could have addressed in pre-process." Ron Smith, Managing Partner, Cordis Group LLC, from The Buyer Lane Preparation Map, SSRN Abstract 6735844.
What the Uplift Buys
The 0.5 to 1.5x multiple uplift documented in the DueDilio 2025 data is the headline finding. The deeper value of the disciplined QoE process is that it lowers post-LOI compression risk. Buyers who receive sell-side QoE-backed materials run their own QoE with a shorter list of issues to investigate, fewer surprises to surface in due diligence, and fewer reasons to renegotiate price between LOI and close.
The owner who screens for QoE discipline at the advisor selection stage is not just buying multiple uplift. They are buying lower transaction risk across the LOI-to-close window, which is the window where most lower-middle-market sellers experience the gap between expected and realized value.