SDE is more reliable than EBITDA for a small, owner-operated business because it reflects the total financial benefit an owner derives, including their salary and perks. It provides a clearer picture of cash flow available to a new owner, whereas EBITDA may understate value by excluding owner-specific expenses.

SDE is more reliable than EBITDA when a small, owner-operated business is tightly tied to the owner’s day-to-day work and personal expenses, because it reflects the real cash flow a new owner can actually take home. In these businesses, EBITDA can feel cold and misleading, stripping out the owner’s salary and perks that absolutely matter to a buyer. SDE tells a more honest, human story “Can this business support my income and my life?” and that clarity brings a sense of confidence instead of anxiety when you’re making such a personal investment.

SDE is more reliable than EBITDA for small, owner-operated businesses when the owner is deeply involved in daily operations. It reflects the true economic benefit to a single buyer by including owner compensation and personal expenses. This makes SDE more practical for Main Street deals where buyers are purchasing a job as well as a business.