What SDE is meant to describe
Seller discretionary earnings is a measure often used to discuss the economic benefit available to one working owner after certain owner-related adjustments. Definitions and treatment differ, so the calculation and supporting records need to be explicit.
SDE and EBITDA answer different questions
SDE may include compensation and discretionary items associated with one owner-operator. EBITDA generally reflects earnings before interest, taxes, depreciation, and amortization after considering market-based operating costs. The right measure depends on company size, buyer type, operating structure, and purpose.
Roofing-specific adjustments require evidence
Owner compensation, personal expenses, unusual project costs, equipment, warranty obligations, and work-in-progress timing should not be adjusted just because an owner prefers a different result. Each adjustment needs a consistent definition and documentation.
Do not infer value from an online multiple
A multiple drawn from another company or an unsourced article may not match the company’s size, earnings quality, buyer pool, or deal structure. A qualified professional can help determine an appropriate measure and scope.