{
  "title": "What is SDE? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-is-sde/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-22",
  "updated": "2026-10-22",
  "section": "Glossary",
  "keyword": "Seller's discretionary earnings (SDE)",
  "short_answer": "Seller's discretionary earnings (SDE) is the total yearly benefit one full-time owner-operator gets from a small business. It is net profit plus the owner's salary, perks, interest, taxes, depreciation, amortization and one-time costs. Most businesses under about $5 million in price are valued as a multiple of SDE.",
  "facts": {
    "Net profit on the tax return": [
      "$110,000",
      "Starting point"
    ],
    "Owner's salary": [
      "$90,000",
      "Added back, one owner"
    ],
    "Owner's health insurance and car": [
      "$18,000",
      "Perks paid by the business"
    ],
    "Interest on the owner's truck loans": [
      "$7,000",
      "New owner may finance differently"
    ],
    "Depreciation and amortization": [
      "$35,000",
      "Non-cash"
    ],
    "One-time lawsuit settlement": [
      "$20,000",
      "Will not repeat"
    ],
    "SDE": [
      "$280,000",
      "Sum of the lines above"
    ]
  },
  "sources": [
    "https://www.sba.gov/funding-programs/loans/7a-loans",
    "https://www.irs.gov/forms-pubs/about-form-8594"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}