Seller's Discretionary Cash Flow

Seller’s discretionary cash flow (SDCF) or seller’s discretionary earnings (SDE) is a common cash flow based measure of business earnings for owner-operator managed businesses. According to the International Business Brokers Association, SDCF can be determined as follows:

• Start with the business pretax earnings.
• Add non-operating expenses and subtract non-operating income.
• Add unusual or one-time expenses, subtract non-recurring income.
• Add depreciation and amortization expenses.
• Add interest expense, subtract interest income.
• Add a single owner’s total compensation.
• Adjust compensation of all other business owners to market value.

ValuAdder financial statement recasting worksheets help you calculate the seller's discretionary cash flow for your business.