I’m trying to clarify how valuation multiples are usually applied in small business acquisitions versus larger, PE-backed deals. My current understanding is that in "smaller" deals, sellers and brokers often quote valuation multiples based on SDE (i.e., EBITDA plus the owner’s salary and personal add-backs). However, when it comes time to actually sell or model out returns, do buyers and investors (especially private equity) continue to use SDE, or do they shift to a true EBITDA basis, with a market-rate owner salary baked in as an expense? Also curious if anyone has a sense of around what size or threshold buyers typically shift from valuing on SDE to valuing on EBITDA.