15 Feb Built to Sell Radio: Reoccurring Revenue vs. Recurring Revenue
Mike Malatesta built Advanced Waste Services, a company that helped businesses dispose of their industrial waste, to $45 million in annual sales before a fateful lunch changed his life forever. It was with a division president of Covanta (NYSE: CVA) who saw acquiring Malatesta’s company as the perfect way to enter the industrial waste industry.
After creating a mini bidding war for his business, Malatesta agreed to be acquired for $51.5 million or around eight times EBITDA. For Malatesta, who started his business picking up industrial waste in a truck, it was an incredible outcome. In this episode, you’ll discover:
- How you need to change your management style once you hit $10 million in sales.
- How “key man” insurance works.
- What a platform acquisition does.
- How to nudge up an acquisition offer without overplaying your hand.
- The difference between “reoccurring” revenue and “recurring” revenue and which one acquirers like more.
- A negotiation mistake that ended up costing Malatesta $4 million.
- How an escrow works and why it’s different than an earn-out.
Malatesta credits his recurring revenue model as the reason he could fetch more than eight times earnings for his company. We’ll figure out your recurring revenue model in step five of The Value Builder System™ — get started for free by completing the Value Builder questionnaire.
