When it’s time to sell a business, or if you’re looking into buying one, the Owner’s cash flow is often one of the most important parts of due diligence. Owner’s cash flow, often known as Seller’s Discretionary Earnings (SDE) for smaller businesses and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, & Amortization) for larger, mid-market businesses, helps determine the correct selling price. For smaller businesses, SDE is the best way to measure how much the total income the business has, as well as the benefits the owner receives. EBITDA is used more often for larger businesses that have a full management team in place. Understanding the Owner’s cash flow and how it’s calculated can help you determine how much your business may be worth or whether it’s a good idea to purchase a business you want to buy.