Deal math

SDE Calculator

Compute Seller's Discretionary Earnings from net income plus owner compensation, interest, depreciation, and one-time add-backs. Free. No signup.

Income statement inputs

TTM Revenue

Last 12 months of top-line revenue.

Net Income (TTM)

Bottom-line profit on the P&L — what actually hit the tax return.

Owner Compensation

Salary, distributions, and benefits paid to the owner-operator.

Interest Expense

Only interest on debt that will not transfer with the business.

Depreciation & Amortization

Non-cash charges. Ignored by a financial buyer.

One-time Expenses

Truly non-recurring items: legal fees, relocation, one-off settlements.

Seller's Discretionary Earnings

$415,000

27.7% SDE margin

Net income$250,000

+ Add-backs$165,000

= SDE$415,000

Small ecommerce deals typically sell for 2.5×–3.5× SDE. Keep the add-backs conservative — lenders verify every one during diligence.

This calculator is for estimation. Actual SDE used in a deal is verified by the buyer's accountant and the SBA lender against tax returns + bank statements. Multiples shown are typical ranges for ecommerce acquisitions under $5M TEV.

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Frequently Asked Questions

What is SDE?

Seller's Discretionary Earnings is net income plus any expenses that belong to the owner — salary, benefits, interest on personal debt, depreciation, and one-time items. It's the single best proxy for what a new owner-operator can actually take home.

How is SDE different from EBITDA?

EBITDA strips out owner-independent items (interest, taxes, D&A). SDE goes one step further and also strips out the owner's compensation and discretionary spend. For businesses under ~$5M in value with an active owner-operator, SDE is the standard metric. EBITDA takes over above that threshold.

What add-backs are lenders willing to accept?

Owner comp, depreciation and amortization, interest on debt that won't transfer, and truly non-recurring items like one-time legal fees or relocation costs. Lenders will push back on anything that looks recurring — ad spend, travel, or 'owner perks' that the business actually depends on.

What multiple should I apply to SDE?

Small ecommerce acquisitions typically sell for 2.5×–3.5× SDE. Stable subscription brands and SBA-ready businesses command the upper end; concentration-risk or declining businesses the lower. Platform and niche matter — use our multiple calculator for benchmarks by category.

Do I need a tax return to calculate SDE?

Not to estimate — the calculator accepts any numbers you have. But to support an offer or an SBA loan application, the seller will need to provide tax returns so the add-backs can be verified line by line.