Glossary · Reading the business
In short
Funds taken out of a business by its owner, often from a sole proprietorship or partnership, not typically reported as a salary. Buyers care because this represents discretionary owner compensation that can be adjusted to improve cash flow.
For valuation purposes, owner's draws are typically added back to derive SDE or EBITDA, as they are part of the owner's discretionary earnings. You need to understand how much the current owner is taking out and how that impacts the business's reported profit. Your personal compensation will replace this post-acquisition.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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