The total annual economic benefit available to a single full-time owner-operator of a small business. Calculated by adding back to net income the owner's total compensation (salary, benefits, and perquisites), non-cash charges such as depreciation and amortization, non-recurring expenses, and other discretionary items that will not transfer to a buyer. SDE is the standard earnings basis for valuing small businesses, typically those under $5 million in annual revenue, and serves as the figure to which a valuation multiple is applied. (Also see Add-back, EBITDA, Valuation Multiple.)
Financial Analysis
Seller's Discretionary Earnings (SDE)
Disclaimer
The information provided on DealScorer is for general educational purposes only and does not constitute financial, legal, tax, or investment advice. Always consult qualified professionals before making any business acquisition decisions. DealScorer makes no representations or warranties regarding the accuracy or completeness of this content.