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  • calculating SDE

    updated 1 year, 1 month ago 0 Member · 1 Post
  • Katie

    Member
    August 30, 2021 at 4:53 pm

    I’m looking at buying a business and I’m trying to understand how to calculate seller’s discretionary earnings (SDE). I get it’s basically the revenue minus non-owner expenses. But is it just the past year’s worth? Or multiple years averaged out? What about the current year? For example, it’s August 2021 right now. In 2019, the company had an SDE of $25K. Last year in 2020 $100K (COVID helped, but growth outlook is good). This year they’re on track for $93K (I figured what they did through July of 2020, compared it to July of 2021, then used that pro-ration for the rest of 2021). The seller is saying $100K is their SDE, but I’m skeptical. What’s correct here? – by /hq/westward101 – –

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