When assessing the value of a small business for sale or purchase, accurately determining its profitability is crucial. One of the key metrics used in this assessment is Seller's Discretionary Earnings (SDE). SDE provides a clearer picture of a business's financial health by adjusting its earnings to reflect its true earning power. This video explores what is SDE, what common EBITDA add backs are, and how to calculate them using a typical SDE calculator template.
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00:00 - Introduction
01:24 - SDE SDE Calculator Template Overview
01:55 - Typical Add-Backs to SDE: Owner's Compensation
03:15 - Personal Expenses
03:40 - Non-Cash Expenses
04:15 - One-Time or Exceptional Costs
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ProjectionHub has helped more than 50,000 founders and entrepreneurs to create financial projections so they can raise investment, apply for loans, and plan for expansions/growth. From budget-friendly DIY financial projection tools to high-touch custom consulting with a CPA expert, ProjectionHub has the financial forecasting solutions your business needs.