Middle-market 2025 M&A transaction data points to a clear conclusion: companies that went to market with a sell-side Quality of Earnings (QoE) report achieved stronger valuation outcomes than those that did not.
According to GF Data’s Full-Year 2025 Key Deal Terms Report, transactions with a sell-side QoE averaged a 7.6x TEV/EBITDA multiple, compared with 6.6x for transactions without one. That 1.0x EBITDA multiple premium is meaningful in any market, but especially in a year when buyers remained selective, and deal structures became more disciplined.
A 1.0x EBITDA Multiple Premium Is Hard to Ignore
In M&A, a single turn of EBITDA can represent a substantial difference in proceeds. For a business generating $10 million in adjusted EBITDA, for example, a 1.0x increase in the valuation multiple could translate into approximately $10 million in additional enterprise value, before considering working capital, debt, tax, and transaction-specific adjustments.
While a QoE report alone does not create value, the 2025 data suggests that preparation, transparency, and credible financial support can influence how buyers assess risk—and how aggressively they are willing to price a transaction.
What the 2025 Transaction Data Shows
The difference between transactions with and without a sell-side QoE was pronounced:
The impact was especially relevant in the lower middle market, where buyer diligence can quickly uncover issues that slow momentum, increase perceived risk, or create pressure for purchase price adjustments. In transactions between $25 million and $100 million, third-party financial validation can be particularly important because buyers may have less historical access to institutional-quality reporting, forecasting, and controls.
A sell-side QoE helps sellers identify and explain key financial trends before buyers begin their own diligence. It can clarify adjusted EBITDA, normalize unusual or nonrecurring items, support working capital expectations, and reduce the likelihood that surprises emerge late in the process.
Why Buyers Reward Prepared Sellers
The broader 2025 market remained selective. GF Data reported that middle-market deal volume declined year after year while average valuations held steady at approximately 7.2x EBITDA. At the same time, buyers placed greater emphasis on risk allocation, as reflected in more disciplined deal structures, higher use of earnouts and seller financing, and continued attention to indemnification and escrow terms.
Against that backdrop, prepared sellers stood out. A well-executed sell-side QoE can give buyers greater confidence in reported earnings, help support the seller’s valuation narrative, and create a more efficient diligence process. When buyers have fewer unanswered questions, they may be less likely to re-trade, delay, or push additional risk into the deal structure.
Preparation Is Becoming a Valuation Strategy
For business owners considering a sale or recapitalization, the takeaway is clear: preparation should begin well before a company goes to market. A sell-side QoE is not simply a diligence document; it is a tool for identifying value drivers, addressing potential buyer concerns, and supporting a more credible presentation of earnings quality.
The 2025 data reinforce what dealmakers often see in practice: cleaner financials, stronger documentation, and fewer surprises can help protect value. In a market where buyers are underwriting risk carefully, sellers who invest in preparation may be better positioned to preserve momentum and achieve stronger outcomes.
For advisors, the message is equally important. Encouraging clients to evaluate earnings quality early can help uncover issues before buyers do, strengthen the sale process, and provide a more defensible basis for valuation discussions.
How We Can Help
Our Transaction Advisory Services team supports business owners and their advisors through sell-side QoE engagements and related diligence preparation. The goal is not only to present clear, defensible financials, but also to reduce friction during diligence, support a more efficient process, and help position the business for a stronger outcome.
If you have a client considering a sale or recapitalization, we would be glad to share our perspective on how early preparation can influence both valuation and process dynamics.
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Data sourced from GF Data’s Full-Year 2025 Key Deal Terms Report. GF Data tracks middle-market private equity transactions valued between $10 million and $500 million.
