Understanding Business Valuation: SDE, EBITDA & Multiples

Seller's Discretionary Earnings (SDE)

For owner-operated businesses, SDE adds back the owner's salary and discretionary expenses to show the true earnings available to a single owner-operator.

EBITDA

Earnings before interest, taxes, depreciation, and amortisation — the standard for larger, manager-run businesses. Buyers apply an industry multiple to EBITDA.

Multiples

Price is often expressed as a multiple of SDE, EBITDA, or revenue. Multiples vary by industry, growth, and risk — see current regional ranges in Market Insights.

Adjustments matter

Normalise one-off costs, owner add-backs, and working capital. A well-supported adjustment can materially change the headline price.