Seller Discretionary Earnings Calculator
Add-backs are worth the multiple.
Valuation multiples vary widely with market conditions, buyer type and the quality of the business. These are planning estimates, a broker's valuation and a completed sale are different things again.
Seller discretionary earnings
$323,000
$240,000 of accounting profit
Add-backs are worth the multiple, so a $83,000 adjustment at 3× is $249,000 of price. Buyers scrutinise them heavily and a padded list damages credibility more than the disputed items are worth. Note that EBITDA here is $249,000, which is the figure a larger acquirer would work from.
How the Seller Discretionary Earnings Calculator works
Add-backs are worth the multiple, so a £74,000 adjustment at three times is £222,000 of price. Buyers scrutinise them heavily, and a padded list damages credibility more than the disputed items are worth.
Also known as: SDE calculator · owner benefit calculator · add backs for valuation
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
What is seller discretionary earnings?
Net profit plus the owner's salary, personal expenses run through the business, genuine one-offs and non-cash charges. It represents what a single owner-operator takes from the business.
What counts as a legitimate add-back?
Costs a new owner would not incur: your salary, personal vehicle, one-off legal fees, discontinued projects. Anything ongoing and necessary is not an add-back however much you dislike it.
How does SDE differ from EBITDA?
SDE adds back the owner's compensation; EBITDA does not. Smaller businesses are valued on SDE because the owner works in them; larger ones on EBITDA because they have management.
What if I employ a manager already?
Then SDE less the manager's cost is closer to what a buyer actually inherits, and a sophisticated buyer will make that adjustment themselves.