SDE (Seller's Discretionary Earnings) calculator
Enter your operating profit and the standard UK owner add-backs — salary above market, pension, car, family wages, one-offs, interest, depreciation. We total your SDE and give you a 1.5×–3.0× indicative price range with sector benchmarks.
By Chris at Sell LtdLast updated - SDE is EBITDA plus every legitimate owner-benefit add-back.
- Used for UK owner-operator businesses under about £250k EBITDA.
- Typical range: 1.5× (high owner-dependency) to 3.0× (transferable, recurring revenue).
- Only add back above-market owner salary — not the whole draw.
How to build a defensible SDE — the ten add-backs buyers accept
Buyers know every trick in the book, so the discipline is: add back only what a rational new owner would not have to pay. That means owner salary above market, genuinely personal expenses, and one-offs a buyer won't inherit. Everything else stays below the line.
- Owner salary above market. Only the excess above what a replacement manager costs.
- Owner pension contributions. Personal contributions channelled through the company.
- Owner car / vehicle. Personal-use portion of company vehicles.
- Family wages above market. Excess spouse / children pay.
- Personal travel and subsistence. Discretionary owner spend not tied to revenue.
- One-off legal / restructuring. Non-recurring professional fees.
- Depreciation. Non-cash — add back to reach SDE.
- Amortisation. Non-cash — same treatment as depreciation.
- Interest. Reflects capital structure the buyer will restructure.
- Owner-specific insurance / subscriptions. Life cover, private club fees, personal training.
What buyers will reject as an "add-back"
Every naïve add-back you propose costs you credibility, and credibility is worth about 0.3× on multiple. These are the ones sophisticated buyers laugh at:
- Marketing spend "we could cut" — no you can't, or you already would have.
- Bad debt "we won't have next year" — you probably will.
- Rent "the buyer can renegotiate" — buyers don't pay for their own upside.
- Staff wages "we'll restructure post-completion" — that's synergy, not SDE.
- "COVID" one-offs in 2026 — nobody's accepting these anymore.
Where the SDE multiple lands
1.5× at the bottom, 3.0× at the top. Where you land depends on transferability. A cash-generative independent business where the owner works 20 hours per week, has a manager in place, and 60% repeat customers, trades at 2.5×–3×. An owner-operated service business where the owner is the business — every relationship, every quote, every sale — trades at 1.5×–2×. If you're not sure, run the same numbers through the multi-method calculator and see whether the EBITDA and DCF methods agree.
SDE for an Amazon FBA or DTC ecommerce business
Ecommerce SDE has two quirks. First, inventory: you don't add back cost of inventory purchased, only the depreciation of inventory management systems. Second, ad spend: buyers scrutinise CAC and won't accept "we could spend less on ads" as an add-back. See our Amazon FBA valuation guide for sector-specific detail.
From SDE to a saleable price
SDE × multiple gives you a headline number. To turn that into an asking price you can defend in a competitive process, you need working-capital normalisation, a management-transition plan, and a data room. Chris drafts all three when he prepares your Information Memorandum — free to start, no exclusivity.
Frequently asked questions
What is SDE and why does it matter for UK small businesses?
Seller's Discretionary Earnings (SDE) is the total financial benefit a single owner-operator extracts from a business — operating profit plus owner salary plus owner benefits plus discretionary spend plus one-offs plus non-cash charges. For UK SMEs under about £250k EBITDA, SDE is the primary valuation metric because buyers are usually replacing themselves as owner-operator.
How is SDE different from EBITDA?
EBITDA adds back interest, tax, depreciation and amortisation. SDE goes further — it also adds back the full owner salary, owner benefits, personal expenses and one-offs. SDE is always higher than EBITDA. Buyers use SDE for owner-operator businesses and EBITDA for anything with professional management.
What's a typical SDE multiple in the UK?
1.5× to 3.0× for most UK owner-operator businesses. Strong local brands with recurring revenue push toward 3×. High-owner-dependency service businesses fall toward 1.5×. Sector matters: MSPs and dental practices trade at higher SDE multiples than cafés and independent retail.
Can I add back my full salary?
No — only the portion above fair-market. If you'd need to pay a replacement manager £70k and you pay yourself £110k, only £40k is a legitimate add-back. Adding back the full £110k signals to sophisticated buyers that you'll pull other tricks in diligence, and they'll discount your multiple.
Do I add back depreciation in SDE?
Yes — SDE is a non-cash-adjusted figure, so depreciation and amortisation are always added back. If you want a pre-add-back figure, use EBITDA.
When should I stop using SDE and switch to EBITDA?
Once the business has a management team the buyer would inherit (typically £250k+ EBITDA, £1m+ revenue), buyers price on adjusted EBITDA. SDE remains a useful sanity check but stops being the primary metric.
Get a fully-drafted, buyer-ready valuation with Chris
Start the free seller survey. Chris (AI deal adviser at Sell Ltd) drafts your Information Memorandum, blended valuation range and confidential listing in about 20 minutes — you edit, publish or keep private. No retainer, no exclusivity.