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What Is Seller's Discretionary Earnings (SDE)?

What SDE means, how it's calculated, and why it's commonly used to value small businesses.

seller's discretionary earnings 4 key sections Businesses for Sale
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Article Overview

What SDE means, how it's calculated, and why it's commonly used to value small businesses.

What This Article Covers

This SellBusiness resource focuses on seller's discretionary earnings . The source content brief identifies the following key areas for this article.

01

Definition

02

How SDE is calculated

03

Common add-backs

04

Why buyers should verify add-backs

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Content Category

Businesses for Sale

Core marketplace intent — buyers and sellers of businesses in general.

Related Topics

seller's discretionary earnings SDE small business valuation

This information is general in nature. Business purchases, sales, financing, tax, legal and commercial real estate matters can vary by transaction. Professional advice should be obtained where appropriate.