acquisitionintermediate
Seller Discretionary Earnings
Adjusted owner benefit from a small business.
What is Seller Discretionary Earnings?
Seller discretionary earnings, or SDE, estimates the cash benefit a full-time owner receives after normalizing expenses and owner compensation. Buyers use it to understand profit beyond top-line revenue.
In Vibe Coding
Small AI-built products can hide owner labor in support, fixes, content, or sales. SDE helps expose whether the business is truly profitable.
Example
If a SaaS has $80,000 revenue, $20,000 expenses, and $10,000 add-backs, SDE may be $70,000.
Why this matters
This matters because Seller Discretionary Earnings appears repeatedly when building, deploying, debugging, or connecting services in vibe coding workflows.
When you'll hit this in practice
You will usually run into Seller Discretionary Earnings when working on How to Value a SaaS Business.