Michael Shea

Central Florida's #1 Business Broker

Should You Use EBITDA or SDE When Selling Your Business in Tampa Bay?

by

Tampa Business Broker

By Michael Shea – Transworld Business Advisors of Tampa Bay

When you’re preparing to sell your business in Tampa Bay, one of the most important financial questions you’ll face is:
Should I use EBITDA or SDE to value my company?

Both are common methods used to assess a company’s cash flow and earning potential, but choosing the right one depends on your business size, structure, and buyer type.

As a business broker who’s helped owners from Brandon to St. Pete and Lakeland to Clearwater, I’ve used both metrics hundreds of times — and I can tell you that choosing the right one can directly impact your asking price, buyer pool, and how long your business sits on the market.

What Is SDE (Seller’s Discretionary Earnings)?

SDE is most commonly used when valuing owner-operated small businesses — which make up a large portion of businesses here in Tampa Bay.

SDE includes:

  • Net profit

  • Owner’s salary

  • Owner perks (car, travel, meals)

  • One-time expenses

  • Non-cash expenses (like depreciation)

In other words, SDE reflects the total financial benefit an owner derives from the business. It helps buyers understand: “If I run this business myself, how much could I reasonably earn?”

SDE is best for:

  • Businesses with one full-time owner-operator

  • Sales under $5 million

  • Restaurants, service companies, online businesses, route businesses, etc.

  • Local or first-time buyers looking for cash flow and lifestyle

In Tampa Bay, SDE is used in 80–90% of small business sales.

What Is EBITDA?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It excludes the owner’s personal expenses and compensation and focuses strictly on operational profitability.

Unlike SDE, EBITDA treats the business as an investment, not a job for an owner-operator.

EBITDA is best for:

  • Companies with management teams in place

  • Businesses generating $1M+ in EBITDA

  • Manufacturing, tech, healthcare, logistics, etc.

  • Buyers like private equity groups, family offices, and strategic investors

Why EBITDA matters:

It offers a standardized metric for comparing multiple investment opportunities — and is often required by banks and SBA lenders when financing larger deals.

Which Metric Should You Use to Sell a Business in Tampa Bay?

Here’s a quick breakdown:

Business Type Use SDE Use EBITDA
Owner-operated retail or service ✅ Yes ❌ Not recommended
Route or home-based business ✅ Yes ❌ Not applicable
Franchise resale (single unit) ✅ Yes ❌ Unless multi-unit
Multi-location or absentee-owned ❌ Not ideal ✅ Yes
Business with manager in place Sometimes (depends) ✅ Yes
Buyers include PE firms or banks ❌ Not sufficient alone ✅ Yes (required)

Why It Matters for Tampa Bay Sellers

Tampa Bay’s business market is diverse — from single-owner pool service routes and cafés in Polk County to $10M construction firms in Hillsborough. That means your valuation method must match the size and sophistication of your operation.

Using the wrong metric can:

  • Misprice your business

  • Confuse buyers

  • Slow down the sale

  • Lead to failed deals during due diligence or financing

As a local broker with over 20 years of experience, I help Tampa Bay business owners choose the right financial approach to tell the best story — and back it up with clean, recast financials.

Pro Tip: You Can Use Both

Some business sales in Tampa benefit from using both SDE and EBITDA. For example, I might use SDE to attract an owner-operator buyer and EBITDA to show a lender or investor the raw earning potential.

At Transworld Tampa, we help you present your financials in the clearest, most compelling way for your ideal buyer.

Let’s Find the Right Valuation for Your Business

I’m Michael Shea, a certified business broker with Transworld Business Advisors of Tampa Bay. Whether your business is a Main Street operation or a lower middle-market company, I’ll help you determine if SDE, EBITDA, or both make sense for your valuation — and work to get you the best possible price.

📍 Serving Tampa, St. Petersburg, Clearwater, Brandon, Lakeland, and all of West Central Florida.

📞 Ready to get a business valuation?
Let’s talk. Call me directly or visit www.yourfloridabusinessbroker.com to schedule a free consultation.

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.