SDE Calculator
Reported earnings
Net income
Bottom-line profit from the tax return or P&L.
$
Owner compensation add-backs
Owner's salary
W-2 or guaranteed payments the current owner pays themselves.
$
Owner payroll taxes & benefits
Employer-side taxes, health insurance, retirement match.
$
Standard non-operating add-backs
Interest expense
Interest on the seller's existing debt.
$
Depreciation
$
Amortization
$
Income taxes
$
Discretionary add-backs
Discretionary / one-time
Personal or non-recurring expenses run through the business.
$
Seller's Discretionary Earnings
$395,000/yr
Total add-backs
$215,000
Add-backs as % of SDE
High ratios draw extra scrutiny from buyers and lenders.
54.4%
SDE bridge
Net income
$180,000
Owner's salary
$120,000
Owner payroll taxes & benefits
$15,000
Interest expense
$22,000
Depreciation
$18,000
Amortization
$4,000
Income taxes
$24,000
Discretionary / one-time
$12,000
Seller's Discretionary Earnings
$395,000
Financing sanity check
Estimated price at 3.5x SDE
$1,382,500
Estimated annual debt service
Assumes 90% financed at ~9.6% over 10 years.
$194,022/yr
Debt service coverage ratio
2.04x
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These calculators are directional estimates for planning, not financial, legal, or tax advice. A real valuation or financing decision depends on your specific books, deal structure, and a lender or advisor's review.
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Private Equity
Search Funds
Independent Sponsors
Family Offices
Growth Equity
Corporate Development
M&A Advisors
Private Equity
Search Funds
Independent Sponsors
Family Offices
Growth Equity
Corporate Development
M&A Advisors
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