Valuation method
SDE (Seller's Discretionary Earnings)
The standard for micro-SMEs and sole proprietorships.
What it is
Seller's Discretionary Earnings (SDE) represents the total financial benefit an owner-operator derives from the business. SDE adds back the owner's salary, personal expenses run through the business, and one-time costs to the net profit. The result is multiplied by a sector-specific SDE multiple.
When to use it
The preferred method for micro-SMEs and sole proprietorships with revenue under €1M, where the owner's compensation is a significant portion of costs. Typical for independent professionals, small retail, trades, and personal services. For advisors, SDE bridges the gap when reported profit understates economic earnings because the owner still works full-time in the business.
How Upswitch applies this method
Upswitch automatically identifies owner-related expenses and adds them back to profit. The SDE multiple is calibrated based on business size and sector. Specific guardrails for micro-businesses prevent unrealistic valuations.
Data and benchmarks
Sector multiples and transaction benchmarks are calibrated against the Upswitch Index, our continuously updated European SME reference dataset (per-country filter).
Explore the Upswitch SME Index→Sectors where this method is the headline
Live Upswitch Index data per sector. Click through to the multiples band that applies to your case.
Hospitality & food service
Owner-operator economics dominate; SDE captures owner labour value implicitly.
See multiples on Index →
Owner-operated retail
Single-location retail with owner front-of-house. SDE is the standard headline.
See multiples on Index →
Solo & micro consultancies
Where the owner is the product, EBITDA-multiple understates value. SDE recognises it.
See multiples on Index →
Owner-led trades
Family construction businesses with the owner on-site daily fit SDE more than EBITDA-multiple.
See multiples on Index →
In your professional report
Each method appears as a dedicated section in your branded PDF, with a full audit trail for every normalisation and adjustment.
| Section | Included |
|---|---|
| SDE | Value and method summary |
| Audit trail | Per adjustment, fully traceable |
How it compares
| Method | Best for | Data needed |
|---|---|---|
| EBITDA multiple | Larger SMEs (> €1M) | Normalized EBITDA |
| Adjusted NAV | Asset-heavy businesses | Balance sheet |
| Fiscal reference | Tax & succession (BE) | Book equity + EBITDA |
Related comparisons
Frequently asked questions
On the Free plan you can run up to three valuations per year using the methods enabled for your workspace. Starter unlocks all ten valuation methods, unlimited valuations, downloadable branded reports without watermark, and live European SME multiples from the Upswitch Index.
Apply SDE to your sector
Real-world examples of SDE in action. Sector-specific multiples, normalisations and worked examples on the Upswitch Index.
Amusement Services
Arts, entertainment and recreation
Appliance Repair
Personal and other services
Bar / Pub
Hospitality, food service and accommodation
Barbershop
Personal and other services
Beauty Supply Store
Wholesale and retail trade
Bed & Breakfast
Hospitality, food service and accommodation
Bookstore
Wholesale and retail trade
Butcher / Meat Shop
Wholesale and retail trade
Campground / RV Park
Hospitality, food service and accommodation