BUSINESS SPEAK · SDE
SDE: Seller’s discretionary earnings
The full benefit one owner-operator takes from a small business.
What it means
SDE is EBITDA plus the owner’s own salary, perks and one-off or personal expenses. It shows what a single new owner could take home before paying themselves.
Where you’ll meet it
- Small owner-run businesses usually sell for about 2–4× SDE.
- Use SDE for small, owner-run firms and EBITDA for businesses with a paid manager.
Worked example
Scenario: EBITDA 125,000; owner salary 60,000; one-off personal expenses 5,000.
- SDE = 125,000 + 60,000 + 5,000 = 190,000
- At 3×: 190,000 × 3 = 570,000
Answer: SDE is 190,000; at 3× the business is worth about 570,000.