Most Businesses with sales Less than £5,000,000 Per Annum usually sell for a multiple of SDE.
Seller’s Discretionary Earnings (“SDE”) is a calculation of the total financial benefit that a single full-time owner-operator would derive from a business on an annual basis. It is also referred to as Adjusted Cash Flow, Total Owner’s Benefit, Seller’s Discretionary Cash Flow, or Recast Earnings.
Businesses with larger Sales and a management team in place are usually sold on a multiple of
EBITDA = net Earnings + Interest + Taxes + Depreciation + Amortization.
The Sales prices of Both types usually sell for between 2 to 5 Times the above figures depending on the type of business and the Buyer. (Exit Strategies).