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SDE is variously referred to as Seller’s Discretionary Cash Flow, Adjusted Cash Flow, Owner Benefit, Recast Earnings, or NormalizedEarnings, although Seller’s Discretionary Earnings is the official terminology advocated by the International Business Broker’s Association (IBBA). SDE vs EBITDA. Owner Compensation.
EBITDA Multiples: A widely accepted method is applying a multiple (commonly 3x to 5x) to the EBITDA figure. Discounted Cash Flow (DCF): This method involves projecting future earnings and discounting them to present value. Capitalization Rate: This is applied to normalizedearnings to provide a snapshot of the business's value.
Enhanced Normalization Adjustments for Earnings What? Weve introduced a new adjustments feature within ValuPlan Plus, enabling users to account for extraordinary items that may distort historical earnings. EV/Sales, EV/EBITDA) and financial metrics (e.g., Sales, EBITDA, Net Income). Why does this matter?
Due Diligence will involve a review of the company’s financials and key documents and contracts, interviews with management and other key employees, customer and supplier reference checks, market research, and other processes designed to help the buyer understand and evaluate the seller’s business.
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