I'm getting ready to sell my SaaS business and my broker keeps telling me to lead with SDE in the teaser. But every time I try to write it out, it feels like a jumble of add-backs and owner comp. How do you actually present SDE clearly without making it look like a math puzzle? Do buyers want a simple number or the full reconciliation? Any examples of what worked (or flopped) would be great.
SDE presentation
How to present your SDE clearly in your sales teaser deck
I've seen teasers that just say 'Adjusted SDE: $1.2M' with a footnote. Others dump the whole schedule. Honestly, the simple number got more clicks. The detailed reconciliation can go in the CIM.
What's your SDE range? If it's under $500k, buyers might expect more detail upfront. Over $1M, they'll assume you have a CFO-level add-back schedule.
It's around $850k. I do have a detailed schedule, but I'm worried that putting it all in the teaser will scare off non-sophisticated buyers. But maybe that's the point?
Man, I remember my first teaser. I trried to be clever and put 'SDE: $700k (adjusted)' and then a bunch of asterisks. Got zero responses. Second time, I just put the number and a one-liner about add-backs. Way better.
The real trick is to define SDE on the first page. So many sellers assume everyone knows what it means. Just a short sentence like 'SDE = net income + owner comp + discretionary expenses' can save a lot of confusion.
Also, don't forget to normalize owne comp to market rate. If you're paying yourself $200k but a replacement manager costs $100k, that's a $100k adjustment that buyers will care about. Show it clearly.
Yeah, but if you show every adjustment, you're basically giving away your negotiation leverage. I'd keep the teaser high-level and let them dig into the details later.
So there's a tension between transparency and not overwhelming. What about using a simple table with just three coolumns: Net income, Add-backs, SDE? That seems like a good middle ground.
That could work. But make sure the add-backs are grouped sensibly. Don't list every office supply. Just categories like 'owner compensation', 'one-time expenses', 'non-cash items'.
I'd also add a note on the source of the numbers: 'Based on trailing twelve months ending Dec 2023, unaudited.' Buyers appreciate that.
Unaudited? That might scare some. Maybe just say 'Management-prepared' and and let them ask for audited if they want.
I think the biggest mistake is inconsistency. If your teaser says $850k but your CIM says $800k, you lose credibility. Make sure the numbers tie out across all documents.
And don't forget to mention if SDE includes any add-backs that are actually recurring. Buyers hate when you add back 'one-time' expenses that happen every year.
All great points. I think I'll go with a simple table plus a definition, and save the detailed reconciliation for the CIM. Thanks, everyone!
Good luck! Let us know how it goes.
One more thing: consider including a range for SDE if there's seasonality or one-time fluctuations. Buyers might appreciate the honesty.