Correct multiple calculation on SDE

May 15, 2026

by a searcher from Edith Cowan University in Perth WA, Australia

Hi I'm in Australia. I'm currently looking at a business to acquire but im getting conflicting advice on how to determine 'my SDE' and multiple to offer rather than the brokers SDE. The Brokers SDE is $840k, and the asking price is $2,750k There are two outgoing working owners. And the broker has suggested a GM could come in and run the business for around $150k per year. What is the best way to think about this and structure my offer? The brokers GM at $150k is ridiculously low - a decent GM would cost $250k to $300k including bonus and retirement plan. My plan would be to become the GM/CEO myself and perhaps hire an assistant to support me at around $150k per year all in. That structure would reasonably replace the two outgoing owners. If I value my own GM role at say $250k, do I include this in the SDE multiple? if not, then the offer would look something like this: $840k - $150k = $690k ($150k for the assistant) $690k x 3.3x = $2,277k (3.3 feels like a fair multiple for this business) Does this logic make sense? This offer is much lower than their asking price so I want to be able to justify it confidently. Thanks!

Reply by a searcher
from Griffith University in Melbourne VIC, Australia

Thanks for sharing Stephen. As a fellow searcher and former consultant (many DDs), there are two key factors / levers here: 1) the multiple and 2) real cost to replace the owners. 1) I'd get the broker / seller aligned on what is a reasonable multiple (e.g. benchmark). Once this is aligned, I'd 2) discuss the real cost of the owners. I agree with you, $150 is incredibly low. Even apply for relevant (even lower) mgmt roles in the industry just to gauge rem to demonstrate that $150k is too low. In this job market, someone would take that job, but that could be disastrous. There's argument that both your GM / CEO and assistant salaries should be included as it'd reflect the true cost to operate the business, after which you'll need to service debt, returns to investors, etc. Good luck - keen to hear how you navigate it!

Reply by a searcher
from The University of Chicago in Nashville, TN, USA

Your example calculation is correct. I would use DealStats to check on comparable SDE multiples but directionally that seems reasonable. For SDE, don't include your own future pay, but if they have two people working then do include the replacement pay for the assistant, $150K sounds high but I have no idea what industry you are in or what the rates are like in Australia. If you want to include your own (or a GM's pay) then that would go into your adjusted EBITDA. Just make sure that you don't use EBITDA multiples for SDE or vice versa, the multiples you need to use will be different.

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