Earnings before Interest, Taxes, Depreciation and Amortization is just one measure of a company’s profitability and operating efficiency. “EBITDA” typically assumes a salary has been paid for a professional manager and is used for valuing larger companies. “SDE” or Seller’s Discretionary Earnings includes everything in EBITDA, plus the salary paid for a working owner/operator and is used for valuing smaller businesses.
But there are other factors and adjustments that can play a role in valuing a company, such as age of equipment, location, quality of customers, etc.
Buyers for a business may take a close look at either EBITDA or SDE in determining their level of interest and the amount of their offer. Click here for more information.
|Michael Marks, creator of Toons ‘n Tips, is a Certified Business Intermediary (CBI) and has over thirty-six years of business experience and ownership. He is a licensed real estate broker in the state of Colorado and has been selling businesses for over eighteen years. Michael has taken up cartooning as a hobby in recent years and has found that by using those skills, along with his extensive business experience, he has been able to create the Toons ‘n Tips drip marketing service for clients all over the country. Find out more about Michael at www.toonsntips.com.|