Seller's Discretionary Earnings (SDE) Calculator
Calculate your business's SDE by adding back owner benefits and non-cash expenses to net income. SDE is the most common metric used to value small businesses. See your total SDE and an estimated value range based on typical 2x-4x multiples.
Starting Point
Net profit after all expenses, from Schedule C or corporate tax return
Add-Backs
Total W-2 wages or draws taken by the owner
Health insurance, retirement, vehicle, phone, meals, travel
Non-cash expense
Non-cash expense
Loan interest paid by the business
Lawsuit, renovation, moving costs, etc.
Quick Tips
- •SDE = Net Income + Owner Salary + Add-backs
- •Include all owner perks (car, health, phone, etc.)
- •Add back one-time expenses that won't recur
- •Depreciation and amortization are non-cash add-backs
- •Small businesses under $5M revenue are valued on SDE
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Start with your business net income from the most recent tax return or profit and loss statement. Add each add back category: your owner salary, health insurance premiums, retirement contributions, vehicle expenses, depreciation, amortization, and any one time costs that will not recur under a new owner. The total SDE is then multiplied by your industry's typical range to show an estimated value. Use the industry specific valuation calculators on this site for a more precise multiple based on your business type.
Frequently Asked Questions
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