SDE vs EBITDA Calculator.
Enter your business financials below to calculate both Seller's Discretionary Earnings and EBITDA, and see what each metric implies for your valuation range.
Business Financials
Include payroll (excluding owner), marketing, software, rent, etc.
The salary the owner pays themselves. Added back in SDE calculation.
Car, travel, phone, meals billed to the business.
Legal fees, one-time projects, redundancy costs, etc.
Results
Which metric should I use?
SDE is used for smaller owner-operated businesses (typically under $5M revenue). It adds back the owner's salary and personal expenses because the buyer will replace the owner with their own management.
EBITDA is used for larger businesses with professional management teams in place. It does not add back owner salary because the business runs independently of the owner.
Understanding the numbers
Seller's Discretionary Earnings
SDE = Net Profit + Owner Salary + Owner Personal Expenses + Non-Recurring Expenses + D&A + Interest + Tax. It represents the total financial benefit the owner extracts from the business annually. Used by individual buyers and search funds acquiring owner-operated businesses where the buyer will step into the operator role.
Earnings Before Interest, Tax, Depreciation & Amortisation
EBITDA = Net Profit + Interest + Tax + Depreciation + Amortisation. It measures operating profitability independent of capital structure and accounting decisions. Used by institutional buyers, private equity, and strategic acquirers evaluating businesses with professional management teams already in place.
What Qualifies as an Add-Back
Add-backs are legitimate expenses that reduce reported profit but will not continue under new ownership. Common add-backs include owner salary, owner vehicle and travel, personal insurance, one-time legal or consulting fees, and non-cash charges. Buyers will scrutinise every add-back, so documentation is essential. See how buyers grade 20 common adjustments in the 2026 EBITDA Add-Back Standard (opens in a new tab).
How Multiples Are Applied
Valuation multiples vary by sector, growth rate, customer concentration, and business model. SaaS businesses with high recurring revenue typically command higher multiples than content or service businesses. The ranges shown are indicative only. Actual multiples depend on deal-specific factors including growth trajectory, market position, and buyer type.
This tool is for indicative purposes only. Results are based on inputs provided and standard industry methodology. They do not constitute financial, legal, or tax advice. Actual valuations depend on many factors not captured here. Always engage a qualified advisor before making transaction decisions.
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