When should you use SDE vs EBITDA?

SDE is standard for small, owner-operated businesses generating under $1M in earnings. EBITDA is standard for larger businesses (over $1M - $2M in earnings) that have professional general managers.

Updated: August 2026 • Verified v1.2

Small Business Acquisition Valuation & SDE Multiple Calculator

Finance & MathPopular

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SDE = NetProfit + OwnerSalary + AddBacks + Deprec + Interest; Valuation = SDE * Multiple

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Understanding Your Results

Calculates total SDE cash flow, total EBITDA, estimated business valuation across configurable multiples (1.5x - 5.0x), buyer's 10% SBA 7(a) equity down payment, and adjusted profit margins.

Practical Guidance & Next Steps

Most Main Street businesses generating under $1M in profit trade between 2.2x and 3.5x SDE. Businesses with recurring revenue, clean books, and low owner dependency command higher multiples.

What is this?

A corporate finance utility that evaluates the market value of small businesses using Seller's Discretionary Earnings (SDE) multiples.

How does it work?

1. Enter annual revenue, net profit, and owner salary. 2. Enter discretionary add-backs, depreciation, and interest expenses. 3. Adjust the SDE multiple to view estimated purchase price and SBA down payment.

Why use it?

Empowers buyers and sellers to negotiate fair market deal terms based on normalized cash flow.

Technical Scope & Calculation Limitations

Models standard SDE multiple acquisition valuation methodologies.

Frequently Asked Questions

SDE is the total financial benefit a single full-time owner-operator derives from a business annually, including reported net profit, owner's salary, health insurance, non-essential personal expenses, and non-cash depreciation.

Windows Desktop & Widget Options