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SDE multiple and asking-price calculator

Buyers often describe a small-business price as a multiple of seller’s discretionary earnings. This calculator does that math, and it shows how the multiple changes if you recast the SDE.

How to use this calculator

  1. Enter the asking price from the listing.
  2. Enter the seller’s claimed SDE or cash flow.
  3. If you have already recast add-backs, enter an adjusted SDE. The multiple will usually rise, sometimes by enough to change the deal.
  4. Read the implied values at 2× through 3.5× as a rough map, not as a bid.

A multiple is only as honest as the cash-flow number under it. If deposits do not match revenue, or add-backs include tuition and “one-time” repairs that happen every year, fix those first. Then come back to this screen.

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FAQ

What is an SDE multiple?

It is the asking price divided by seller’s discretionary earnings, the cash flow a full-time owner-operator can take from the business. Buyers use it as a shorthand to compare small-business listings.

What is a normal SDE multiple?

It depends on the industry, the risk, and the size of the cash flow. BizBuySell has published average earnings multiples across popular sectors in a range of about 2.0× to 3.3×. That is a broad historical band, not a quote for your deal. Riskier or owner-dependent businesses often sit lower; contracted, transferable cash flow can sit higher.

Why does the multiple jump when I enter an adjusted SDE?

Because you are no longer dividing the same asking price by the seller’s unrecast number. If weak add-backs come out, cash flow falls and the multiple rises. That is usually the more honest picture.

Is this a valuation?

No. It is arithmetic you can do on a listing. A valuation needs recast financials, comps, and advice from a CPA or broker.

Disclaimer. Deal Check is not financial, legal, or accounting advice. These pages and calculators are educational planning tools and can miss context. Verify every number with a CPA and a business broker, and do your own due diligence before making an offer.