What Is SDE for a Laundromat?
SDE for a laundromat is seller's discretionary earnings: the total annual benefit the store produces for one full-time working owner. It is net profit from the tax return, plus that owner's compensation and payroll taxes, plus depreciation and interest, plus documented personal and non-recurring expenses. It is the number your price is built on.
Key takeaways
- SDE = net profit + one owner's compensation + depreciation + interest + documented personal and non-recurring items.
- Start from the filed tax return, not the bookkeeping P&L. The return is what a lender underwrites.
- One working owner only. A second person a buyer must pay stays in the expenses.
- Every add-back needs a source document, or a lender strikes it.
- Median laundromat SDE in the transaction data was $76,560 across 855 reported sales (Source: BizBuySell, 2021-2025).
The Calculation
| Line | Example | Source document |
|---|---|---|
| Net income per the federal return | $44,000 | The return |
| Add: one working owner's compensation and payroll taxes | +$46,000 | Payroll register, W-2 |
| Add: depreciation and amortization | +$26,000 | Depreciation schedule |
| Add: interest expense | +$9,000 | Loan statements |
| Add: documented personal expenses | +$7,000 | Mileage log, registration, statements |
| Normalized SDE | $132,000 |
Illustrative. Note that the add-backs are most of the number — which is why documentation quality decides so much.
Why Each Add-Back Belongs
Owner compensation. A new owner decides whether to pay themselves a salary. It is discretionary to ownership, so it is added back — but only for one working owner.
Depreciation and amortization. Non-cash accounting charges. No money leaves the business.
Interest. A cost of the current owner's capital structure, which a buyer will replace with their own financing.
Documented personal expenses. A vehicle used personally, a family phone plan, personal travel — costs a new owner will not incur, provided you can prove they were personal.
Genuinely non-recurring items. A one-time legal matter, a casualty. With an invoice and an explanation.
What Does Not Get Added Back
| Item | Why not |
|---|---|
| Repairs and maintenance | Recurring in a mechanical business |
| Routine cleaning and supplies | Required to operate |
| Card-processing fees, insurance | Recurring |
| A second owner's compensation | SDE assumes one working owner |
| Unpaid family labor | The buyer will pay someone |
| Deferred maintenance skipped | A liability created, not a cost avoided |
| Unreported cash revenue | Not an expense at all |
That last row matters. Add-backs are documented expenses a new owner will not incur. Undocumented revenue is a different category entirely and receives little or no value, because buyers pay for provable earnings and lenders underwrite documented cash flow.
SDE Versus EBITDA
SDE prices an owner-operated store, where the buyer is acquiring a job and a return together. EBITDA prices a business that already pays market-rate management, where the buyer is acquiring cash flow.
The same store shows both figures, differing by roughly the value of one owner's labor — often $35,000 to $55,000 a year. Applying an SDE multiple to an EBITDA figure understates the business badly; the reverse overstates it. Always ask which base a quoted multiple was built on. See SDE vs. EBITDA.
How Price Follows From It
Normalized SDE × a market multiple, less the present cost of near-term equipment replacement.
The market data: median earnings multiple 3.50x, lower quartile 2.72x, upper quartile 4.50x, across 855 laundromat and coin-laundry sales reported to BizBuySell for 2021-2025, on median owner earnings of $76,560 and a $250,000 median sale price.
Where a specific store lands is decided by lease term, evidence quality, equipment condition, utility cost share, owner dependence, service mix, and competition.
The Lender's Version
Worth knowing, because it differs from yours.
A lender computes cash flow available for debt service by taking SDE, striking any add-back without a source document, and deducting a market-rate salary for whoever will run the store. That figure — not SDE — is what the coverage ratio is built on.
Test your own deal that way before making an offer. A store showing comfortable coverage on seller-presented SDE can fail on lender-computed cash flow, and that discovery is better made in week one than in week six.
What to Do Next
Build the SDE from the filed return with a document reference on every add-back line. Then recompute it with any undocumented item removed and a market salary deducted. The gap between those two numbers is what you are actually negotiating about.
The Next Step
Frequently Asked Questions
What does SDE stand for?
Seller's discretionary earnings: the total annual financial benefit a business produces for one full-time working owner. It is net profit from the tax return plus that owner's compensation, plus non-cash charges like depreciation, plus interest, plus documented personal and genuinely non-recurring expenses.
Why is SDE used instead of net profit?
Because reported net profit is after the current owner's compensation and after non-cash and financing items that a new owner will structure differently. SDE normalizes those away so two stores can be compared, and so a buyer can see what the business would produce for them.
Does SDE include both owners' salaries if a couple runs the store?
No. SDE assumes one working owner. If a second person's labor is genuinely needed and a buyer will pay someone to replace it, that cost stays in the expenses. Adding back both and then applying an SDE multiple overstates the business by the full amount times the multiple.
How is SDE used to set a price?
Normalized SDE times a market multiple, less the present cost of near-term equipment replacement. Across 855 laundromat sales reported to BizBuySell for 2021-2025 the median earnings multiple was 3.50x, with the middle half between 2.72x and 4.50x.
Sources
- BizBuySell, Laundromat and Coin Laundry Valuation Benchmarks, 2021-2025 closed sales — https://www.bizbuysell.com/learning-center/valuation-benchmarks/laundromats-coin-laundry/
- Coin Laundry Association, 2024 Laundry Industry Survey — https://member.laundryassociation.org/hubfs/IndustrySurvey24.pdf
- U.S. Small Business Administration, 7(a) Loans — https://www.sba.gov/loans/7a-loans/
This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.