Calculate Your SDE
Enter your business financials below to calculate your SDE.
Quick Tips
Pro Tip: Include all owner benefits like personal vehicle expenses, family member salaries, and personal travel costs.
Pro Tip: Include all owner benefits like personal vehicle expenses, family member salaries, and personal travel costs.
Ready for a Professional Valuation?
Get expert help valuing your business with our professional valuation plans and services.
sde-calculator
form for sde calculator
Why Calculate SDE?
SDE is a critical metric for small business owners and potential buyers to understand the true cash flow of a business.
Business Valuation
Determine your business’s market value by understanding its true earning potential beyond basic net profit.
Sale Preparation
Prepare for business sale negotiations with accurate SDE calculations that buyers will evaluate.
Financial Planning
Make informed decisions about business operations and owner compensation strategies.
Understanding SDE Numbers
SDE is a critical metric for small business owners and potential buyers to understand the true cash flow of a business.
Net Profit / EBITDA
Your business’s bottom line profit or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This is your starting point.
Owner's Salary/Wages
Any salary, wages, or benefits paid to the owner. Since a new owner may not take the same compensation, this is added back to show true cash flow.
Non-Cash Expenses
Expenses like depreciation and amortization that reduce net profit but don’t require cash outflow. These are added back to show true cash generation.
One-Time Expenses
Non-recurring expenses like legal fees for acquisitions, equipment breakdowns, or other unusual costs that won’t continue under new ownership.
Discretionary Expenses
Owner’s personal expenses run through the business, excessive travel, family member salaries, or other expenses a new owner might not incur.
Why It Matters
SDE shows the total financial benefit available to an owner-operator, making it essential for business valuation and sale negotiations.
SDE Articles & Insights
In-depth articles about Seller’s Discretionary Earnings, valuation methods, and business selling strategies
WORKSHEET
A Seller's Discretionary Earnings (SDE) Worksheet
Let’s look at an extreme example of a SDE worksheet for a seller where a lot of normalizing adjustments are required.
ANALYSIS
An Example of SDE vs. EBITDA vs. Adjusted EBITDA
This newsletter issue attempts to clarify why you might hear a business was sold for “6 times earnings” (without mentioning it
COMPARISON
SDE vs. EBITDA vs. Adjusted EBITDA Leads to Multiples Confusion
How Small Businesses Are Valued Based on Seller’s Discretionary Earnings (SDE)
VALUATION
How Small Businesses Are Valued Based on Seller's Discretionary Earnings (SDE)
Public companies and middle market businesses are valued as a multiple of EBITDA – Earnings Before Interest, Taxes
PERSPECTIVES
SDE and Business Valuation Variations amongst Sellers, Buyers and Lenders
SDE and Business Valuation Variations amongst Sellers, Buyers and Lenders
In the last issue, we provided a detailed 30-
Subscribe Company’s Newsletter!
Stay ahead with expert tips, insider strategies, and updates straight to your inbox. Subscribe now and empower your business journey!
