It also depends on the size of the deal and the new owner’s role in the business as well as the current owner’s role. If they are working 60 hours a week then a portion of those hours should be accounted for with another employee. For the first year you will be working 60 to 70 hours per week AFTER that adjustment in any case. That’s the norm for a new owner and don’t let anyone convince you otherwise.

Yes, you’re thinking about it the right way — this is a standard part of moving from Seller’s Discretionary Earnings (SDE) to a more buyer-focused view like EBITDA or true cash flow. You back out the seller’s salary and any personal/non-operational expenses, then add in a market-rate salary for whoever will be filling that role post-close — whether that’s you or someone you hire. As for what salary to include for yourself, it depends on: Market rate for the role you’ll be performing (GM, CEO, etc.) in that size of business and industry Your own opportunity cost And importantly, what the business can afford while still hitting your debt service and return targets Some searchers set their salary as the lesser of (1) market comp or (2) what’s reasonable after covering debt service and minimum working capital. Others benchmark against SBA underwriting standards, which often assume a ~$100K salary for the operator in cash flow models. Ultimately, it’s a balancing act — you want to be realistic about your own time and responsibilities, but not overstate profitability by undercompensating the post-close operator (even if that’s you).