SDE (or sometimes called Seller’s Discretionary Cash Flow or financial recasting) is a calculation of the total, annual financial benefit an individual business owner or operator gets from the business. It combines profit before tax, interest, one-time expenses and owner benefit. These discretionary owner benefit are expenses are paid for by the company but personally benefit the owner. Common examples include retirement contributions, home improvements, vacations, automobile expenses, family cell phones, etc. These costs to the business were optional by the individual owner and should be added back into the earnings of the business so that prospect buyers can determine if they leave that money in the business or benefit themselves, individually. SDE is most often determined for the sale of a small or ‘main street’ business and can come with some debate between seller and buyer into the validity of the recasting, which ultimate impacts business value conclusions. For mid-market and larger companies, the metric most often used in place of SDE is EBITDA (Earnings Before Interest Depreciation and Ammortization).