Disclaimer: Some or all of the companies mentioned may compensate us, at no cost to you. This helps keep our content free. Our rankings and evaluations are based on compensation and in-depth analysis
Free Tool
SDE vs. EBITDA Calculator
Two numbers that determine what your business is worth. Enter your financials below and we'll calculate both — and explain exactly what each one means for your sale price.
SDE
Seller's Discretionary Earnings
SDE measures the total financial benefit a single working owner gets from the business — profit plus the owner's salary, perks, and any personal expenses run through the company.
Typically used for: businesses under $5M in revenue, where the owner works in the business
EBITDA
Earnings Before Interest, Taxes, Depreciation & Amortization
EBITDA measures operating profitability as if the business had no debt, no taxes, and no accounting adjustments — but does NOT add back the owner's salary.
Typically used for: businesses over $5M in revenue, or where a professional manager runs day-to-day operations
Enter Your Financials
Use your most recent full fiscal year. Every field that applies to your business will affect one or both numbers.
Starting point
Used as context — not directly in the SDE or EBITDA formula, but determines which metric buyers will use.
This is the foundation both SDE and EBITDA are built on top of.
Add-backs (added to both SDE and EBITDA)
Added back because a new owner may have different financing — or none at all.
A new owner's tax situation will differ. Taxes are added back to show pre-tax earnings.
A non-cash accounting charge — added back because no money actually left the business.
Like depreciation but for intangible assets. Also non-cash — added back.
SDE-only add-backs (added to SDE but NOT EBITDA)
SDE adds this back because the buyer will pay themselves differently. EBITDA does not — it assumes a manager is already paid a market salary.
Personal benefits paid through the business — part of the owner's total compensation.
Car payments, phone, travel, meals — legitimate add-backs if they are truly personal.
Legal fees, one-time equipment purchases, moving costs — anything that won't repeat.
Your SDE
—
Typical valuation range
Your EBITDA
—
Typical valuation range
Want to know what your business would actually sell for?
Your SDE and EBITDA are the starting point. A licensed broker will apply the right multiple for your industry, size, and risk profile to give you a real number.
Get a Free Consult with a Business Broker NowHow each number is built
Every line shows whether it is included in SDE, EBITDA, both, or neither — so you can see exactly where the two numbers diverge.
Estimated valuation range
Based on your SDE and EBITDA, here is the typical range buyers pay across most industries. The right multiple for your business depends on industry, growth, owner dependency, and other factors.
SDE-based valuation (2x – 4x)
—
Most common for businesses under $5M revenue
EBITDA-based valuation (3x – 6x)
—
Most common for businesses over $5M revenue
Which number should you use?
The right metric depends on the size of your business and who the likely buyer is.
SDE Use SDE when...
- Revenue is under $5 million
- You (the owner) work in the business
- The buyer will also be the operator
- You're selling to an individual buyer
- It's a small business or lifestyle business
EBITDA Use EBITDA when...
- Revenue is over $5 million
- A paid manager runs day-to-day operations
- The buyer is a private equity firm or strategic acquirer
- The business already has a management team
- You're positioning for a larger transaction
This calculator is for informational and educational purposes only. SDE and EBITDA calculations vary by business, accountant, and industry convention. Always work with a licensed business broker and CPA when preparing financials for a business sale.
© BusinessBrokerFinder.us.com — Free to use and share.
© BusinessBrokerFinder.us.com — Free to use and share.