Deal Playbooks 5 min readUpdated Apr 18, 2026
SDE vs EBITDA — Which to Use
The plain-English difference between SDE and EBITDA, when each applies, and how to translate between them when valuing an AI SaaS.
TL;DR
Use SDE for owner-operated businesses under ~$3M revenue. Use EBITDA once there is a management team the buyer wouldn't replace. SDE ≈ EBITDA + owner comp + one-time expenses.
The core difference
SDE assumes the buyer replaces the owner. EBITDA assumes the business runs without the owner already. That single assumption shifts multiples by 20–40%.
Frequently asked questions
Can I mix the two?
No — pick one and be consistent across your comps.
Related guides
Acquisitions
How to Value a SaaS Business: The 2026 Method
The valuation method used by real buyers on live deal terminals — SDE multiple, NRR adjustment, churn discount and model-risk factor.
Acquisitions
AI Startup Valuation Multiples in 2026 (By Stage & Category)
Live benchmarks for what AI startups actually sell for in 2026 — by ARR band, category, model dependency and growth rate.
All AiMeta guides
How to Buy an AI Startup in 2026: Full Acquisition PlaybookAI Startup Valuation Multiples in 2026 (By Stage & Category)How to Sell Your AI SaaS: The Founder's Exit PlaybookAI Acquisition Due Diligence Checklist (2026)Asset Purchase Agreement Template for AI StartupsHow to Value a SaaS Business: The 2026 MethodSDE vs EBITDA: Which to Use When Buying a SaaSRevenue-Based Financing (RBF) Explained for Indie FoundersRBF vs Equity vs Loan: Which Should Indie Devs Choose?How to Raise RBF: Step-by-Step for AI FoundersRBF Terms Explained: Cap Multiple, Share %, VaultBest AI Small-Cap Stocks to Watch in 2026How to Invest in AI Stocks in 2026 (Without Buying Nvidia)AI vs Quantum Stocks: Where's the Real Upside?AI Stock Catalysts to Watch This QuarterHow to Become an AI Indie Hacker in 2026Best AI Micro-SaaS Ideas for 2026How to Launch on Product Hunt in 2026 (AI Edition)The 2026 Build-in-Public PlaybookHow to Find a Technical Cofounder in 2026Cofounder Equity Split: What's Actually Fair?Cofounder Agreement Checklist (2026)How to Price Your AI SaaS in 2026AI Startup Metrics That Actually Matter in 2026How to Buy a Prompt Library or AI Asset in 2026How to Sell an AI Training Dataset in 2026AI Agent Business Models That Actually Work in 2026How to Verify MRR on a Deal (Buyer's Checklist)Escrow for Online Business Sales: How It Works in 2026How to Track AI Buzz Across X, PH and IH in 2026