What Your Trade Is Really Worth (and the Independence Discount Behind the Number)

By the time the phones pick up again, you've landed on a nice number. It's wrong, and the reason's the same in every trade: the business still runs on you, and that quoted multiple was never built for a one-to-five-truck business that runs on one person.

Two different worlds are hiding inside that one number. One's a private-equity platfrom priced on EBITDA. The other's the owner-operator, priced on SDE. This page pulls them apart, names the gap, and sends you to your trade, where the real numbers live.

Your number is an SDE multiple

A $500K-$2M owner-operated trade business is worth a low-single-digit multiple of its seller's discretionary earnings, not the 7 to 15 times you have seen quoted. That quoted figure is an EBITDA multiple for a private-equity platform roll-up, which strips out the owner's pay and assumes a management layer's already in place.

SDE adds your pay back in, because whoever buys your business has to replace you. That one accounting difference is most of why the two numbers split.

EBITDA describes a company that already runs without any single owner. SDE describes one that still runs on the owner writing the checks and quoting the work.

So the same business might look like 9 times to a broker and roughly 3 times to the person actually buying it. Both are real numbers, and the second one is the one you'll be paid on.

Run it on $320K of owner earnings. The magazine math puts that well north of $2M. At a low-single-digit SDE multiple you're looking at roughly $700K to $1M, a long way from the $2M-plus the 7-to-15 framing implied.

If you want to see the conversion line by line, it's the same method a buyer runs on your numbers: how to value a small business the way a buyer will. It shows exactly where the platform number and your number split.

The gap is you

What separates the low Main Street number from a stronger one is owner-independence, and you can measure it in dollars. Your trade and your revenue matter a lot less than you'd think.

A buyer is paying for the probability your earnings survive you leaving. Last year's earnings are only the evidence.

That's also the second reason the platform multiple runs higher, and it's the one that matters to you. The roll-up already runs without any one owner, so its management risk is handled. You're selling a company where that risk is the first thing a buyer has to deal with after closing.

So the SDE-versus-EBITDA gap works as a direct readout of how much of the business still sits on the owner.

Most owners never see that number, because 86% of small business owners have no professional valuation or only a rough estimate. They're anchored to the broker's headline and never see the discount under it.

Put a dollar figure on that gap and you've got the independence discount that sets your multiple, the same value driver the rest of this site runs on. What's on the other side of closing it is a business that runs without you, running on documented systems and named owners.

Find your trade

The discount shows up in every trade. But the single most expensive thing tying value to the owner is different in each one, so start with yours, where the real numbers and the #1 driver live.

Each trade hub carries the real per-trade numbers working owners close at. This page just carries the frame: those numbers are SDE, and the discount's yours to close.

Then pick the job you're doing

Trade first, then the job you're actually trying to get done. Each trade hub fans out to five jobs, so you come in by trade and pick from there.

• Sell the business for more than the owner-dependence discount.
• Value it the way a buyer will, in SDE.
• Improve it so it runs without you, which is the same work that lifts the multiple.
• Hire the manager who holds the standard you hold today.
• Buy a business in the trade, using these same levers in reverse to set an offer.

Read your trade hub to learn what your number is, and the method posts to learn how to move it, since each one does its own job.

Find your real number

The discount's in your control and you can rank what drives it, so your real number is knowable. You don't have to wait for a broker to show up to learn it.

That's what we're building Keystone to measure, and it's closed for now while the build finishes. When it opens, the free diagnostic will take about four minutes, score how much of the business still runs on you, and return a value range with the most likely figure locked, calibrated against 10 years of BizBuySell Insight Reports and 1.6M+ SBA 7(a) loan records.

To get in when it opens, join the waitlist at https://app.trykeystone.io.

FAQ

What multiple do trade and service businesses sell for?

An owner-operated trade business in the $500K-$2M range sells at a low-single-digit multiple of seller's discretionary earnings, set by owner-independence and the strength of any recurring book. The 7 to 15 times you may have seen quoted is an EBITDA multiple for platform roll-ups, not the owner-operator's number.

Why is the multiple I saw quoted so much higher than what I'm told my business is worth?

The quoted figure prices a private-equity platform on EBITDA, which assumes a management layer is already in place and strips out the owner's pay. Your business is priced on SDE, which adds your pay back in because a buyer has to replace you, so the same business reads as a much lower multiple.

What's the difference between an SDE multiple and an EBITDA multiple?

SDE includes the owner's compensation and add-backs and is how a $500K-$2M owner-operated business is priced. EBITDA strips the owner's pay out and assumes a management team is already running the company, which is why platform roll-ups trade at far higher multiples than a one-to-five-truck owner ever will.

What makes a trade business worth more?

The business running without the owner: documented work, a named manager who holds the standard, and customer relationships that belong to the company. Owner-light service businesses transact near 3.5x SDE and owner-dependent ones near 1.65x, a $851,000 spread on a $460,000-SDE business.