FINANCIAL WORKSHEETS / OWNER-ENTERED ASSUMPTIONS
EBITDA & SDE adjustments.
Make the bridge from reported earnings to proposed adjusted earnings explicit. Keep every add-back and deduction visible, with the same period and currency throughout.
Use the calculator ↓Opening your local calculator…
METHOD & WORKED EXAMPLE
Follow the arithmetic.
EBITDA = net income + income tax + net interest expense + depreciation + amortization. Proposed adjusted EBITDA adds your proposed non-recurring/discretionary expenses and subtracts normalization costs. Proposed SDE adds one working owner’s compensation to that adjusted figure.
Illustrative arithmetic: net income 100,000 + income tax 20,000 + net interest 5,000 + depreciation 10,000 + amortization 5,000 = EBITDA 140,000. Add proposed costs of 8,000 and subtract 3,000 of normalization costs: adjusted EBITDA 145,000. Add one working owner’s compensation of 40,000: proposed SDE 185,000. All values share one currency and annual period.
LIMITATIONS & SOURCES
Keep the assumptions visible.
Only add back amounts already deducted in the starting net income and not added back elsewhere. EBITDA and SDE are non-standardised measures. Compensation for replacing the owner, recurring expenses and disputed adjustments require careful treatment. These labels do not make an adjustment acceptable to a buyer, accountant or lender.
- SEC: Non-GAAP interpretations, questions 103.01–103.02
- BDC: EBITDA definition and worked example
- IBBA Canada: Definition of seller’s discretionary earnings
Method reviewed 4 October 2026. Your accounting and transaction definitions govern the inputs.