This YouTube video, presented by Florida Business Broker Michael Shea, clarifies key financial terms used in business valuations and sales, specifically Discretionary Earnings (DE), Seller’s Discretionary Earnings (SDE), Owner’s Benefit (OB), and EBITDA. Shea explains that DE/SDE/OB represent the free cash flow available to an owner after adjusting for non-transferable and one-time business expenses, such as personal car payments or hurricane repairs. In contrast, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) includes the owner’s salary, reflecting a more passive investment perspective. The video emphasizes understanding these distinct metrics is crucial for business owners to accurately value their companies and navigate the sales process effectively, as different buyers and brokers may utilize varying benchmarks for multiples.
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 450 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential.