What SDE includes
It often starts with profit, then adds owner salary, benefits, certain perks, one-time expenses, and other discretionary items that a buyer can reasonably review.
Add-backs need proof
A buyer will not accept every add-back just because the seller wants it. The cleaner the books, the easier the conversation.
SDE is not the sale price
SDE is the earnings base. Value also depends on the multiple, risk, industry, growth, systems, and owner dependence.
Field note
Add-backs need a straight face test
SDE can be helpful, but only if the add-backs are real, explainable, and supported. A buyer will not accept every personal or unusual expense just because it improves the multiple.
The cleaner the records, the less defensive the conversation becomes.
Do not guess from the symptom
The symptom may be cash stress, tax pain, low profit, or exit anxiety. The cause is usually deeper in the operating rhythm.