Business Valuation Expert Florida: Price Off SDE, Not EBITDA

Before you list a company, ask a business valuation expert Florida buyers will respect to price it on seller's discretionary earnings if it earns under about $2 million. BizBuySell's 2025 data shows a median sale at 2.61 times cash flow and 94 percent of asking. Expect about 170 days to close.

Use the Right Earnings Measure

Smaller companies are usually valued on seller's discretionary earnings, or SDE. Larger ones use EBITDA. A 2025 summary puts the dividing line near $2 million of cash flow. Under it, SDE rules.

SDE starts with net profit. It adds the salary the owner pays himself, the perks that run through the business, and one-time costs. The result shows what one working owner could take home.

That is why the same company looks cheaper on an EBITDA multiple and richer on an SDE multiple. Know which one a buyer is using before you compare quotes.

Know the 2025 Benchmarks Your Business Valuation Expert Florida Will Use

BizBuySell recorded 9,586 small business sales in 2025, with a median sale price of $350,000. The average multiple of cash flow was 2.61, and the average multiple of revenue was 0.69. Florida, California and Texas drew the most buyer interest, the marketplace reported.

Do not multiply the medians. Median cash flow was $158,950, and 2.61 times that is about $415,000, well above the $350,000 median price. Averages of ratios and medians of prices do not line up.

Match the Multiple to the Size

Size changes the multiple. The International Business Brokers Association reported medians for the third quarter of 2025. They were 2.0 times SDE below $500,000 of earnings and 2.5 times from $500,000 to $1 million. From $1 million to $2 million the median was 3.0.

Apply them as a sanity check. A shop with $400,000 of SDE lands near $800,000 at 2.0. One with $800,000 lands near $2 million at 2.5. A firm with $1.5 million lands near $4.5 million at 3.0. Those are medians, not promises, and your business valuation expert Florida team should adjust for risk, growth and how much the owner does.

Expect Less Than the Asking Price

Sellers received about 94 percent of asking price on average in 2025. On a $1 million listing, that is about $940,000. A realistic ask leaves room for that gap without scaring off buyers.

Also plan for time. The median close took 170 days. A good business valuation expert Florida sellers hire will build that wait into the plan and the cash needs, not leave it as a surprise.

Works When, Breaks When

SDE pricing works when the owner is the operator and a buyer will step into the same job. It breaks when the company needs a manager the buyer must pay, because SDE then overstates what the new owner keeps. Subtract a fair manager's salary in that case.

The usual mistake is borrowing a multiple from an article about large deals. An EBITDA multiple of 5 or more fits companies in the millions of earnings. Applied to a small shop, it creates an asking price no buyer will meet.

Prepare the Numbers a Buyer Will Test

Your valuation team should expect buyers to test three things. They look at the add-backs, at customer concentration and at how much work depends on the owner. Concentration matters because one customer who leaves can remove a large share of income. Owner dependence matters because a buyer is paying for a business, not a job.

Treat the 2.0 to 3.0 medians above as a middle band. Growing profits, long leases and trained staff can push a company above it. A shrinking customer list pushes it below.

Lenders matter too. In a BizBuySell survey from mid-2025, 41 percent of brokers said new SBA rules were causing delays. Funding rules change, so ask your lender about current terms before you set a closing date.

Leave Room for Diligence

Buyers will ask for documents after they sign a letter of intent. Leave room in the price for what they find. A business valuation expert Florida sellers retain can run the same checks first, so surprises come early and cost less. Keep a data room with three years of returns, leases, contracts and payroll. Every missing paper is a delay, and delay lowers the odds of closing.

Document Three Years of Add-Backs

Before you ask for a number, build a three-year SDE table. List net profit, owner pay, perks and one-time costs, each with a document behind it. Hand it to your valuation expert and ask which items a buyer will challenge. A clean table cuts weeks off diligence, and every unsupported line is an invitation to cut your price.

Frequently Asked Questions

Q: What is a typical multiple for a small Florida business? A: The 2025 national average was 2.61 times cash flow, with medians of 2.0 to 3.0 times SDE by size band. Florida data may differ. Ask for sold comparables in your industry.

Q: Should I use SDE or EBITDA? A: Use SDE under about $2 million of cash flow and EBITDA above. Buyers of larger firms expect EBITDA. Match the measure to the buyer.

Q: How long does a sale take? A: The median time to close was 170 days in 2025. Allow for more if lenders or inspections add steps.

Q: Will I get my asking price? A: On average sellers got about 94 percent. Price with that gap in mind.