Glossary
With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.
« Back to Glossary Index
Seller’s Discretionary Earnings
« Back to Glossary IndexCategory: Business Valuation
Seller’s Discretionary Earnings (SDE) is a calculation of the total financial benefit that a single full-time owner-operator would derive from a business on an annual basis and is one of the most common measures of cash flow used to value a small business. SDE is calculated using the following formula: Pre-tax net income + owner’s compensation + interest expense + depreciation and amortization + discretionary expenses + adjustments for extraordinary, non-operating or non-recurring revenue or expenses. SDE is a popular valuation tool for small businesses because it is straightforward to calculate and allows one to easily compare a business’s earnings to other businesses.
« Back to Glossary IndexSynonyms:
Adjusted Cash Flow, Total Owner’s Benefit, Seller’s Discretionary Cash Flow, Recast Earnings.
Acronym:
SDE
French Translation: