EBITDA vs Seller’s Discretionary Earnings: What Sellers Must Understand EBITDA and Seller’s Discretionary Earnings (SDE) are two of the most important metrics used to evaluate business performance. Understanding the difference is essential for accurate valuation. EBITDA measures operational profitability before certain expenses, while SDE adds back owner-specific costs to show true owner benefit. Small businesses…
How Improving Margins Increases Your Business Valuation Profit margins reflect operational efficiency—and they directly influence business valuation. Even small improvements in gross or net margins can significantly increase a company’s sale price because buyers pay premiums for businesses that generate higher profitability with lower operational effort. Common ways to improve margins include optimizing pricing, renegotiating…
Understanding Cash Flow Quality: The Hidden Indicator Buyers Prioritize When evaluating a business, buyers rarely look at revenue alone. The quality of cash flow—its consistency, predictability, and sustainability—is one of the most important financial indicators in any business valuation. Strong cash flow signals operational health and reduces risk for investors and lenders. High-quality cash flow…
