"SDE starts with a company's annual net income (what's on the tax return), then adds back the owner's salary and benefits, and any one-time or non-recurring expenses. For example, if a business earns $250,000 in net income, the founder pays herself $100,000, has $40,000 in benefits, and incurs a one-time $10,000 legal expense, the SDE would be about $400,000. That number is then multiplied by a valuation multiple, typically 2x to 2.5x for most ecommerce brands, and up to 5x for category leaders."
"I'm the co-founder of BizPort, a marketplace that helps founders exit their companies. I lead BizPort's ecommerce division, connecting buyers and sellers. Before BizPort, I was the head of mergers and acquisitions at OpenStore, an aggregator in Miami, where I acquired about 50 Shopify brands. That experience exposed me to ecommerce transactions and what founders should and shouldn't do when preparing to sell their businesses."
Frank Kosarek cofounded BizPort in November 2025 and leads its ecommerce division, matching buyers and sellers. He previously led acquisitions at OpenStore and acquired about 50 Shopify brands. Buyers of ecommerce businesses focus on seller's discretionary earnings (SDE) rather than top-line revenue and seek recurring sales such as subscriptions. SDE is calculated from annual net income plus owner salary and benefits and one-time expenses. Valuation multiples typically range from 2x to 2.5x for most brands and can reach 5x for category leaders. Founders should track SDE monthly to understand growth and valuation.
Read at Practical Ecommerce
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