SDE vs EBITDA Calculator

SDE includes owner compensation; EBITDA excludes — different metrics for different buyer types.

SDE annual

Reasonable owner salary

Mgmt salary replacement

EBITDA

$280,000

SDE

$400,000

Delta to SDE

$120,000

How the math works

EBITDA = SDE − owner salary − management replacement.

$400k SDE − $120k owner salary = $280k EBITDA. Delta $120k.

How to Use

Enter sde annual.
Enter reasonable owner salary.
Enter mgmt salary replacement.
Read ebitda.

Frequently Asked Questions

SDE vs EBITDA difference?

SDE: net income + owner salary + owner benefits + interest + taxes + depreciation + amortization + non-recurring items. Used for owner-operator buyer valuation (sub-$3M businesses). EBITDA: net income + interest + taxes + depreciation + amortization. Used for institutional/PE buyer valuation (assumes professional management compensation). Conversion: EBITDA = SDE − reasonable owner salary. Mid-market businesses with management in place: EBITDA more relevant. Single-owner small business: SDE more relevant. Both reported in deal docs.

How does this fit small business finance?

Small business owners use this calculator alongside cash flow forecast, P&L, balance sheet, and tax projection. Pair with industry benchmark data (RMA, BizMiner, IBISWorld). Decision framework: ROI > capital cost + risk premium > minimum threshold for owner time. Single calculator output is one input — owner intuition + market knowledge + financial discipline complete the picture.

SBA financing fit?

SBA 7(a): up to $5M, working capital, equipment, real estate, business acquisition, longer terms. SBA 504: real estate + equipment, fixed rate, 10–25 years. SBA Express: up to $500k, faster. SBA Microloan: up to $50k. Owner-occupied real estate (51%+ owner use) qualifies. Personal guarantee required. SBA fees: 2–3.75% of guaranteed portion.

When is this worth pursuing?

Small business decisions weighing capex, hiring, expansion, financing should consider: ROI threshold (typically 20%+ for owner risk), payback period (under 3 years preferred), cash flow coverage, opportunity cost vs alternatives. Calculator outputs inform but don't decide — owner judgment about market, competition, and execution capacity is what makes the call.