Tag
SDE
7 pages across every collection.
Article··2 min
SDE vs EBITDA
Which earnings figure applies to your business, why the multiples attached to them are not interchangeable, and the €400,000 mistake owners make when they mix the two.
Answer··1 min
Can I add my salary back to EBITDA?
Only the portion above a market rate for the work you actually do. Adding the whole salary back assumes the buyer gets a free chief executive, which no buyer accepts.
Answer··1 min
Should I use SDE or EBITDA?
SDE if one owner works full time in the business and the buyer will replace them personally. EBITDA once a management layer exists. The multiples are not interchangeable.
Answer··1 min
What is SDE (seller's discretionary earnings)?
The total financial benefit one owner-operator takes from a business in a year — operating profit plus owner compensation, benefits and one-off costs added back.
Answer··1 min
Is a 3x multiple good?
It depends on what it is three times. Three times EBITDA is low for most businesses above €500k of earnings; three times SDE is at the top of the range for a small one.
Answer··1 min
What multiple do small businesses sell for?
Most businesses under €1M of turnover sell for 2 to 3.5 times SDE. The figure that trips owners up is which earnings number that multiple applies to.
Answer··1 min
How do I calculate the value of my small business?
Four steps: normalise the earnings, pick the right earnings figure, apply a size-appropriate multiple, then adjust for debt and cash. Worked example included.