What is the difference between EBITDA vs SDE? (with a cash flow bonus)

Let’s Buy a Business

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1y ago 16:05

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Alright, a question I get often.

What is the difference between EBITDA vs SDE? We dive into a few high-level differences to watch out for when evaluating businesses.

EBITDA is typically used for larger businesses ($2-3M+ Profit). SDE is typically used for smaller businesses.

BUT neither of those is cash flow.

A few podcast nuggies: - SDE is not Cash Flow - Loan payments don't show up on the P&L many times - If you take a business with no debt, stack on 80%+ debt, you are fundamentally changing the entire business structure. You are ADDING risk here.

You can get into trouble if you only take their costs vs WHAT YOUR costs will be.

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