Mar 3, 2024
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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Diligence
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