SDE vs EBITDA: How Florida Buyers Value Your Business (2026)

If you have talked to a business broker, a buyer, or an accountant about selling your Florida company, you have probably heard two acronyms thrown around as if they mean the same thing: SDE and EBITDA. They do not. And the difference is not academic — it directly changes the number a buyer will offer for your business. Get the metric wrong, and you can either leave six figures on the table or price yourself out of the market before a single buyer picks up the phone. This matters right now because the Florida market in 2026 is full of active buyers — SBA-backed individuals hunting for owner-operated companies under $3M, and private equity groups and strategics rolling up larger platforms across HVAC, healthcare, construction, and professional services. Each of those buyer types leans on a different earnings metric. Knowing which one applies to your business tells you how it will actually be valued. ## What SDE and EBITDA Actually Measure Both SDE and EBITDA are attempts to answer the same question: how much real cash flow does this business produce for its owner? They just draw the line in different places. ### Seller's Discretionary Earnings (SDE) SDE stands for Seller's Discretionary Earnings. It represents the total financial benefit a single full-time owner-operator gets from the business in a year. You start with net profit and add back: - **Owner's salary and payroll taxes** — because a buyer who runs the business themselves captures that pay - **Interest, depreciation, and amortization** — non-operating and non-cash items - **One-time or non-recurring expenses** — the lawsuit you settled, the new roof on the shop, the failed software rollout - **Discretionary and personal expenses** — the vehicle, the phone, travel, and any personal costs run through the business SDE assumes one owner working in the business. That is why it is the standard for smaller, owner-operated companies — the kind an individual buyer purchases with an SBA 7(a) loan and then runs day to day. ### EBITDA EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. The critical difference: EBITDA does not add back an owner's salary. Instead, it assumes the business pays a market-rate manager to do the owner's job, and that expense stays in the numbers. EBITDA answers a different question — how much profit does this business throw off after paying for professional management? That is exactly what a private equity buyer or a strategic acquirer wants to know, because they are not going to run your business themselves. They are going to install or keep a management team. ## The Core Difference: Who Runs the Business After the Sale The entire SDE-versus-EBITDA question comes down to one assumption: who operates the business after closing? - If the buyer is an individual who will replace you and run the company themselves, they think in **SDE**. Your salary is a benefit they get to keep, so it gets added back. - If the buyer is a fund or a larger company that will layer in professional management, they think in **EBITDA**. The cost of that management stays as a real expense. Here is the practical rule of thumb used across the Florida market and nationally:

Business Profit Level	Primary Metric	Typical Buyer
Under ~$1M	SDE	Individual / SBA buyer, owner-operator
~$1M – $2M	Gray zone — buyers look at both	Sophisticated individuals, search funds, small PE
Above ~$2M	EBITDA	Private equity, strategic acquirers, family offices

That $1M–$2M gray zone is where a lot of Florida deals live, and it is where the metric choice matters most. A business earning $1.5M in SDE might be presented one way to an individual buyer and another way to a PE group — and a broker who understands both framings can run a process that pulls in both. ## A Real Example: Same Business, Two Numbers Let's put numbers to it. Imagine a Tampa-based commercial landscaping company with clean books.

Line Item	Amount
Net income (per tax return)	$420,000
+ Owner's salary	$180,000
+ Interest	$40,000
+ Depreciation & amortization	$110,000
+ Owner's personal auto & phone	$25,000
+ One-time legal settlement	$35,000
SDE	$810,000
− Market-rate manager salary	($120,000)
EBITDA	$690,000

The only real difference between the $810,000 SDE and the $690,000 EBITDA is the cost of a manager to replace the owner. Same business, same cash flow, two legitimate numbers. Now apply multiples. An owner-operated landscaping business at this size might sell for roughly 3.0x SDE, or about $2.43M. If a larger acquirer valued it at 4.0x EBITDA, that is about $2.76M. Notice that the higher multiple on the lower number can still produce a higher price. This is exactly why the metric and the multiple have to be read together — a big multiple on the wrong base number is meaningless. ## Why You Can't Just Compare Multiples The single most common valuation mistake we see from Florida sellers is comparing a multiple they read online to their own business without checking which metric it is built on. "I heard HVAC companies sell for 5x" is a useless statement until you know 5x of what. - A 5x **EBITDA** multiple and a 3x **SDE** multiple can describe the exact same business at the exact same price. - Larger businesses command higher EBITDA multiples partly because they carry less owner dependency and more infrastructure — a premium that has nothing to do with the metric itself. - Industry reports, broker comps, and BizBuySell listings do not always state which metric they use. If you don't confirm it, you are comparing apples to oranges. This is where recasting — the process of adjusting your financials to show true earnings — becomes the most valuable pre-sale work you can do. Every legitimate add-back you document raises SDE or EBITDA, and at a 3x–5x multiple, a single $50,000 add-back you can prove is worth $150,000 to $250,000 in enterprise value. That is not a rounding error. That is the difference between a good sale and a great one. ## What This Means for Florida Sellers in 2026 Florida remains one of the most active small-business M&A markets in the country, and a few local dynamics make the SDE-versus-EBITDA question especially relevant this year: - **No state income tax** means Florida owners often keep more discretionary spending inside the business, which makes disciplined recasting even more important to surface true earnings. - **SBA lending is strong**, and the SBA world runs on SDE for the sub-$3M owner-operated deals that dominate Orlando, Jacksonville, and the Gulf Coast. - **PE roll-ups are aggressive** in Florida HVAC, healthcare, home services, and professional services — and those buyers underwrite on EBITDA. If your business is at the top of the gray zone, positioning it for an EBITDA buyer can lift both your multiple and your price. The takeaway: your business does not have one fixed value. It has a value that depends on which buyer you attract and which metric they use. A seller who only ever talks to individual buyers may never learn that a strategic acquirer would pay a full turn more on EBITDA. Running a real process — one that reaches both buyer pools — is how you find out. ## Frequently Asked Questions ### Which metric will a buyer use for my business? It depends almost entirely on your profit level and the buyer type. Below roughly $1M in earnings, expect SDE and individual or SBA buyers. Above roughly $2M, expect EBITDA and private equity or strategic buyers. In the $1M–$2M range, sophisticated buyers will look at both, and how your business is packaged determines which framing wins. ### Is SDE always higher than EBITDA? Yes, for the same business — because SDE adds back the owner's full compensation while EBITDA subtracts a market-rate manager's salary in its place. The gap between the two numbers is essentially the cost of replacing the owner's role. ### Does a higher multiple mean a higher price? Not necessarily. A multiple is only meaningful attached to a specific earnings number. A 4x EBITDA valuation and a 3x SDE valuation can land on very different prices for the same company. Always ask "a multiple of what?" before you get excited about a number. ### Can I improve my SDE or EBITDA before selling? Absolutely, and you should. Documenting every legitimate add-back, cleaning up your books, separating personal expenses, and reducing owner dependency all raise your defensible earnings figure. At typical multiples, that work pays for itself many times over. This is the core of exit preparation, and the earlier you start — ideally 12 to 24 months out — the more you can move the number. ### How do I know if my add-backs will hold up? Buyers and their quality-of-earnings teams scrutinize add-backs hard. The ones that survive are documented, non-recurring, and clearly personal or one-time. Aggressive or vague add-backs get thrown out in due diligence and can damage your credibility on the rest of the deal. A broker who has been through the process will tell you which add-backs are worth claiming and which will only invite pushback. ## Get a Real Number for Your Business SDE or EBITDA, the goal is the same: know what your Florida business is truly worth before you sit across from a buyer. Guessing off an online multiple is how sellers get talked down. Walking in with clean, recast financials and the right metric is how they get paid. CBH Business Group represents Florida business owners across HVAC, construction, healthcare, professional services, and more, in the $3M–$50M range. We recast your financials, identify the buyer pool that pays the most, and run a process that reaches both individual and institutional buyers. As a Top 50 Florida broker and the #1 Top Dollar Producer in Central Florida for 2025, we know what your business is worth to the buyers who matter. Start with a free, confidential valuation at https://cbhbusinessgroup.com/valuation-calculator, or book a call directly with Jesse Hastings at https://calendly.com/jesse-cbhadvisory. Prefer to talk it through now? Call (407) 908-3845. Your first conversation is confidential and there is no obligation — just a straight answer on what your business is worth and how to get the most for it.