Owner earnings
Owner earnings, or seller's discretionary earnings (SDE), is profit before the owner's own pay and perks, interest, taxes, and depreciation: the earnings small, owner-run businesses are priced on.
In a sale
Which businesses are priced on owner earnings?
Small, owner-run businesses are: their sale multiples are quoted on owner earnings, while larger companies, with the owner paid like a hired manager, are priced on EBITDA. A multiple of owner earnings does not compare with a multiple of EBITDA, which is why every multiple on the industry pages names the measure it is quoted on. Each item of the owner's pay and perks counted back into the earnings is an adjustment a buyer will ask to see documented.
Where it comes up
Read it in context
It does not come up in an article or a playbook chapter yet.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.