Claims to verify · Before you buy
How to verify SDE before buying a business
Published · Reviewed by The Diligence Standard Team · Updated
Start with reported profit, document every adjustment and identify the work and costs that continue after closing. Verified SDE is a bridge supported by source records, not a single figure copied from a listing.
A realistic transaction story
A pool-service company advertised $360,000 of SDE. The schedule added back two family salaries, a vehicle and travel. One family member managed routing full time and the vehicle was used by technicians. Only part of the adjustments represented expenses a buyer could actually remove.
What the evidence changed
The label “owner expense” overstated the amount that would disappear under new ownership.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- Rebuild the SDE bridge line by line and price the people, assets and services the business will still require.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.