SDE (Seller's Discretionary Earnings) is the profitability metric used to value smaller, owner-operated businesses — typically those with under $1M in true EBITDA. It's the number SBA-financed buyers, search funds, and individual operator-buyers actually use to write offers.

The formula: Net Income + Owner Compensation + Owner Benefits + Personal Expenses + Depreciation + Interest + One-Time Costs. The idea is to estimate what the business produces in total economic benefit to a single full-time owner-operator — before financing structure, taxes, and depreciation choices.

How buyers use it: An SBA buyer or search fund will multiply your SDE by an industry-specific multiple (typically 2x–5x for small businesses) to estimate offer price. Multiples vary widely by industry — pest control and MSPs trade at the high end, restaurants and asset-heavy trucking at the low end.

What this calculator gives you: A defensible estimate of your SDE based on standard add-back categories, plus a valuation range using typical SDE multiples for your industry. The ‘conservative,’ ‘most likely,’ and ‘optimistic’ values reflect how multiples vary within each category based on business quality, recurring revenue, growth, and customer concentration.

What it doesn't give you: Your actual sale price. Real valuations depend on dozens of factors not captured in a calculator — growth trajectory, customer concentration, owner-dependency, market timing, buyer competition, deal structure. For a real, defensible valuation, get a free call.