SDE Valuation Calculator
Our SDE valuation calculator helps owner-operators find the true enterprise value of their small business using 2026 Seller’s Discretionary Earnings multiples.
Estimation based on median 2026 transaction multiples. This tool does not constitute a certified Quality of Earnings (QoE) report.
Guide to the SDE Valuation Calculator
An SDE valuation calculator is the essential financial tool for small business owners and solo founders preparing to sell. When a company generates under $5,000,000 in gross revenue, buyers do not use corporate EBITDA. Instead, main street business brokers and individual buyers rely on Seller's Discretionary Earnings. This metric calculates the total cash benefit that one full-time owner-operator derives from the business annually.
Normalized SDE × Owner-Operator Multiple (2.5x - 3.5x) = Enterprise Value
The 2026 Small Business Multiplier Ecosystem
Currently, standard owner-operator businesses trade between 2.5x and 3.5x of their SDE. Buyers assign these multiples based entirely on transition risk. You can push your valuation toward the 3.5x ceiling by documenting clean financials, retaining reliable staff, and removing yourself from daily operations. If the business collapses the moment you go on vacation, buyers view it as a high-risk job rather than an asset, driving your multiple down to the 2.5x floor.
Critical Add-Backs in the SDE Valuation Calculator
To extract an accurate valuation from our tool, you must track your add-backs flawlessly. Because small businesses often serve as lifestyle assets, owners legally run personal expenses through the LLC. You must add back your entire owner salary, personal vehicle leases, family health insurance, and personal travel. Every single dollar you add back instantly increases your normalized earnings, which directly amplifies your final exit price when the buyer applies their multiplier.
Frequently Asked Questions
What is the main difference between SDE and EBITDA?
The primary difference lies in the owner's compensation. EBITDA assumes the company must hire a full-time, salaried general manager to run the business. SDE assumes the buyer will personally step in as the full-time owner-operator. Therefore, SDE adds the owner's entire salary back into the cash flow, resulting in a higher baseline number but a slightly lower multiplier.
Does inventory value increase my SDE multiple?
Typically, standard M&A transactions assume that normal, salable inventory is included in the multiple. However, if you carry a massive surplus of seasonal inventory right before the sale, you and the buyer will usually negotiate that excess inventory value as a separate, dollar-for-dollar addition outside of the primary multiple.