Qualitative vs. Quantitative Factors
This is Part 2 of our Cascade Conversations episode on The Sale-Ready Mindset. To listen to Part 1, click here.
Eric Green, Managing Director at Cascade Partners, and Craig Doescher, Founder and CEO of Doescher Group, explore the qualitative factors that significantly influence valuation—most notably reducing owner dependence and elevating a strong, capable management team.
This episode highlights how documented processes, robust training programs, and well-organized information can signal operational readiness and instill buyer confidence. Eric and Craig also unpack the natural disconnect between entrepreneurial intuition and investor due diligence, reinforcing the critical role of advisors who can bridge both perspectives and guide owners through a smoother, more successful sale process.
Read a summary of the conversation below or click here for complete transcript
Key Qualitative Drivers of Value
People and management depth are the top determinants of value. Buyers want to see that a company can run without the owner—owner dependence is the biggest risk.
Demonstrating a strong, empowered management team during presentations is crucial. If the owner does all the talking, buyers notice.
Great internal documentation—SOPs, training materials, and thorough data room “document density” builds buyer confidence.
Reducing perceived risk by proactively addressing known issues through deeper analysis (e.g., customer concentration) can materially improve outcomes.
Key Quantitative Drivers of Value
Clean, consistent monthly financial closes are essential; numbers will be refreshed multiple times throughout a sale.
Accurate forecasting and strong pipeline visibility are vital—even though entrepreneurs often dislike committing to future projections.
Digging deeper into data helps mitigate concerns buyers will inevitably have (e.g., breaking down customer concentration beyond the top-line view).
Bridging the Buyer–Entrepreneur Gap
Entrepreneurs rely on intuition and decades of experience; buyers—especially private equity—rely on process, risk assessment, and data.
This mismatch can create friction, but advisors like Cascade and Doescher Group act as bilingual intermediaries, understanding both entrepreneurial mindsets and private equity diligence demands.
Coaching owners to stay open, patient, and responsive throughout the process is essential to a successful transaction.
Resources and Final Advice
Craig highlights their Unsolicited Offer Playbook, designed to help owners respond thoughtfully when approached directly by buyers.
His core advice: Pause, get organized, and seek expert guidance before engaging.
Eric reinforces Cascade Partners’ role as a resource to owners well before they’re ready to sell, connecting them with partners like the Doescher Group for preparation.
Transcript
Announcer
Welcome to Cascade Conversations. Join the Cascade Partners team and our network of trusted advisors as we work to demystify the details, terminology and strategies of acquisitions, divestitures, financing, performance improvement and restructuring.
Eric Green | Managing Director of Cascade Partners
A lot of value drivers are quantitative in nature, but there’s a whole host of qualitative things that come out that are nuanced that buyers look for. Organization, having everything buttoned up, etc.
Can you speak to some of those qualitative things that you’re seeing or or you’re putting in place as you’re engaging with the client?
Craig Doescher | Founder and CEO of Doescher Group
Yes, sure. The number one, two and three is the people. That’s not something you can really put on paper, and it’s something that comes through throughout a process. And so, if we were to say that the number one detractor from value and from transferability of a company is risk, then the number one risk is owner dependance. And so, the more that you can demonstrate that your business runs without you as the hopefully retiring owner in the near future, the better. And so, that would be probably one, two and three on the list, as I said.
There’s a lot of other qualitative things, like for example, having great SOPs—having great Standard Operating Procedures—that are documented, that are transferable with it—like having a great training program for people. These are intangible assets that you can just overwhelm buyers with great data. And this is non-quantitative data, but you can overwhelm them. Oftentimes, I think about the number of documents that end up in a data room because some of the data room tools can tell you how many pages are in there. There often is a sense of the weightiness of a lot of information that makes a buyer comfortable. It’s like, “Wow, there’s too much data here for me to have a look at. They must be doing something right!”
Eric Green: Right. Document density.
Craig Doescher: (Laughs in agreement) Document density, exactly. I would say that the owner dependence—if you can address that—it just makes a world of difference. And then it comes into, when you get into management presentations, if the owner is doing all the talking, the buyer’s picking up on that. If the owner sitting at the side of the table and he’s got a management team of four men and women that are answering all the questions very, very competently, that’s a game changer, right?
Eric Green: Yeah. So we started this thread around the qualitative things: The team, the team, the damn team is pushing back. Yeah, that’s fantastic. And we get into that because the owners are so enthusiastic to tell their story, but we try to coach them to…
Craig Doescher: …Chill out a little bit.
Eric Green: (Laughs) Yeah. Just recognize that there’s a team behind you, and that’s what largely people are looking to purchase.
Maybe we shift back to the quantitative side. What are the things you help management think through as they’re going to market? What are the some of the obvious but maybe some of the more subtle quantitative measures?
Craig Doescher: Yeah, so the obvious stuff is you got to have a clean monthly closing of your books. Through the sale process, you’re going to refresh your numbers a minimum of 3 to 4 times. And you’re also going to have issued a forecast that’s going to be in the initial materials. And to your point about the owner focusing on running the business, there’s nothing more important than making sure the business performs through the sale process, and you don’t have a decline in performance; which we’re kind of an insurance policy against that. We can play that role by helping not get them too bogged down.
So, if you’ve got that process in place, what part of that is the forward looking information. So, we talked about pipeline; that’s a huge aspect of any sale process is the more you can provide forward-looking data—and for clients, this is like sometimes one of the hardest things to do—I know you don’t want to commit to future views. You hate doing it. But I’m telling you it’s worth it. You’re not saying this is exactly what’s going to happen. You’re saying, “These are the things we’re chasing here. We’re chasing $50 million worth of opportunity. We’re hoping we’re going to close $15 million of it.” Having that data is just crucially important.
And then the one other thing that I’ll say—these can be like these one off analyses—is any time there is a potential risk in the business, it’s really trying to take two, three, four layers deeper in the data to try to address that, and I’ll give one really, useful example that might apply to other businesses: We had a client that had heavy exposure to one of the Big Three automakers. So, they 40+% of their revenue was coming from this one customer. And so, we knew this was going to be an issue going in the process.
So we said, “Okay, well tell us how is this work sourced?”
And they said, “Well, the work is purchased by the plants.”
And we’re like, “Oh that’s good. So, how many plants are there that you serve?”
“Well, we serve 27 plants.”
“Okay. Now, does that mean there are 27 different decision makers?”
“Yes”
“Does that mean do they coordinate together?”
“No. They’re ordering themselves…”
There’s also central purchasing. So, you have 28 customers. So, then we said, “Okay well let’s go take a look at the data, because we have projects, and let’s see where they came from.” We were able to demonstrate that, essentially, 40% of revenue—there was no more than like 4% or 5% concentration in any one decision maker. So, we said, “If you mess up at this plant, is it going to affect this plant?” And they had an example, and so, then we were able to include that in the story, and, in that case, we were able to get a really great outcome for them.
And the investment bank—we had done this analysis prior to involving the investment bank—but that was featured all over the materials. They took that data that we created and it was 5 or 6 different pages, and charts, and things like that. And it was super helpful because then you’re able to proactively address that issue.
Eric Green: It’s crazy to bring that up because we literally just did that for a mandate we’re on now because it showed customer concentration risk, but they serve almost 90% of the industry that has nine manufacturing. But it’s the warehouse and the manufacturing facility that are the decision makers. That’s fantastic.
Craig Doescher: Yeah. I mean another example would be like a construction company where it’s referral-led, but there also might be a consultant that also often recommends them in. But [the consultant] is never paying for the services. So, knowing that they have 50 referral sources, even if there’s only five guys that actually source them the the work. So, it’s really like I said: peeling back those layers, digging a couple layers deeper, and really being smart about how you present that information.
Eric Green: One of the things I find interesting—and it’s a human psychology experiment—is many of our owners and founders, they’ve been running the business for multiple decades, and they just have a good intuition about their business; so, they just know what’s going to happen, plus or minus, they know the customers, the customers will call them. But when a new buyer comes in and is investigating the investment opportunity, they don’t know the business. And so, they want to ask a lot of questions and try to understand. That causes some friction and some frustration along the way, as if they’re challenging the owners to the assumptions or to the intuition.
Have you come across that in your work?
Craig Doescher: (Nodding) Oh yeah.
Eric Green: I’d love to hear, how do we continue to coach and suggest to owners that this isn’t an inspection or an investigation of integrity. It’s an education process.
Craig Doescher: Yeah. I mean, I think this gets at the fundamental difference between—we’ll just use private equity [as an example] because they’re the biggest buyer group out there. Take a private equity investor and an entrepreneur, right. An entrepreneur likely got into that role because—I mean, it could be everything from they got fired from a job and they were unemployable to, at age 18, they started their own business—they all have great stories. One of the reasons why I love working with self-made business owners is because they all have great stories.
Then you have on the other side of the table; you have a private equity professional who likely went to the Wharton School, they’ve got an MBA, they’ve probably never turned a wrench. And so, their concern is—and they have an investment committee, they have a boss, they have all these things that they’re dealing with that an entrepreneur doesn’t deal with—and so, their concern is they’re very much like trying to suss out where the risk is and make sure they don’t make a mistake. And the entrepreneur is like, “Ah, mistakes, whatever. As long as I have a good enough batting average, who cares?” And so so that is often a place where we, rather than trying to fight that battle with them, we say, “I understand it’s a stupid request. Let us answer it or give us access to the data and we’ll come back to you. And if you sign off on this response, then we can move forward.” Because it’s very difficult to, I mean, entrepreneurs just tend to have very strong personalities, and that’s part of what makes them great.
Eric Green: I feel like, Cascade tries to differentiate ourselves because five of the six managing directors have run businesses. We’ve been entrepreneurs and not just transactionally related. So, we have a ton of empathy for that. We’ve also been on the buy-side. So, we understand investment committees and putting capital to work.
So, playing that intermediary where you can understand both sides of it, I think is an important way we try to differentiate ourselves and making sure that our business owners know that we have a ton of respect for that Wharton MBA, despite the fact that they might not have turned a wrench, but also a ton of respect for the entrepreneurs when they say, “This feels intrusive.”
Craig Doescher: Well, we call it “being bilingual.” And I think that’s where you guys fit as well because you’re a firm that primarily serves that demographic. It’s to some extent, I always joke, it’s sometimes easier to do professional/professional; it’d be easy just to go after private equity, sell-side work. Once you get a good relationship, it becomes very smooth.
With entrepreneurs, it’s like very bumpy, but that’s kind of where the fun comes in. And what I tell them is, “Give me 6 to 9 months through the selling process; you just have to suspend some of your opinions and let me coach you through this.” I’m not just going to say “No” when you give me what I think is a stupid request. I’m going to say, “Okay, I don’t know how to answer that question. Help me figure it out.”
Eric Green: Yeah, “help me.” So, yeah, as we come to the conclusion of this conversation, what about the Doescher Group do you want to let our audience know more about?
Craig Doescher: I mean, we’ve kind of gone through what we do. We did create a page on our website where we’d like to direct you to go if you want to check out more about us, it is www.doeschergroup.com/cascade. That page will take you to an e-book that we wrote this past year, which is called the Unsolicited Offer Playbook.
As Eric knows, there is a whole industry around trying to get to owners before Cascade is able to advise them. And so, there are a lot of you, as business owners who might be watching this, who have gotten these emails, have received these cold calls; and if they catch you in a weak moment, you might actually respond to it. And The Unsolicited Offer Playbook is a whole book about what to do when that happens—which is, stop and get organized before you start engaging too far down that path, is our advice. But it’s a good book, it’s a good reference tool, and I think it ties into a lot of what we discussed today.
Eric Green: Absolutely. And, for our audience, what we do as an investment bank, just think of us as a resource before you actually want to sell. We can introduce you to our partners like Craig. We want to be a resource for you, an educational resource, and open up partnerships like the Doescher Group.
So, it was a great pleasure to be with you, Craig. Thank you for taking your time. And I appreciate the audience for taking the time.
Craig Doescher: Thank you.
Thank you for joining us for Cascade Conversations. For more information, please visit Cascade-partners.com or call (248) 430-6266.