Correct multiple calculation on SDE

May 15, 2026

by a searcher from Edith Cowan University in Perth WA, Australia

Hi I'm in Australia. I'm currently looking at a business to acquire but im getting conflicting advice on how to determine 'my SDE' and multiple to offer rather than the brokers SDE. The Brokers SDE is $840k, and the asking price is $2,750k There are two outgoing working owners. And the broker has suggested a GM could come in and run the business for around $150k per year. What is the best way to think about this and structure my offer? The brokers GM at $150k is ridiculously low - a decent GM would cost $250k to $300k including bonus and retirement plan. My plan would be to become the GM/CEO myself and perhaps hire an assistant to support me at around $150k per year all in. That structure would reasonably replace the two outgoing owners. If I value my own GM role at say $250k, do I include this in the SDE multiple? if not, then the offer would look something like this: $840k - $150k = $690k ($150k for the assistant) $690k x 3.3x = $2,277k (3.3 feels like a fair multiple for this business) Does this logic make sense? This offer is much lower than their asking price so I want to be able to justify it confidently. Thanks!

Reply by a searcher
from Griffith University in Melbourne VIC, Australia

Thanks for sharing Stephen. As a fellow searcher and former consultant (many DDs), there are two key factors / levers here: 1) the multiple and 2) real cost to replace the owners. 1) I'd get the broker / seller aligned on what is a reasonable multiple (e.g. benchmark). Once this is aligned, I'd 2) discuss the real cost of the owners. I agree with you, $150 is incredibly low. Even apply for relevant (even lower) mgmt roles in the industry just to gauge rem to demonstrate that $150k is too low. In this job market, someone would take that job, but that could be disastrous. There's argument that both your GM / CEO and assistant salaries should be included as it'd reflect the true cost to operate the business, after which you'll need to service debt, returns to investors, etc. Good luck - keen to hear how you navigate it!

Reply by a searcher
from Georgia Southern University in Charleston, SC, USA

Seems you certainly have some amount of adjustment / wiggle room. I agree with William - figure the add back number that makes sense to you given the two working owners situation and knowing what the market rate for a GM to successfully run this type of business.

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