Seller’s Discretionary Cash Flow (SDCF)

Seller’s Discretionary Cash Flow (SDCF) is the total financial benefit a single owner-operator derives from a business, including pre-tax earnings, owner compensation, and non-business related expenses.

SDCF is the most common valuation method for smaller businesses in the Raleigh-Durham area with sales between $1.5 million and $50 million. It requires “recasting” financial statements to show a buyer the true cash flow they would inherit after replacing the current owner.