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.
Over 15 years Business Research Group has been working with business owners to help them understand what their business is worth, how to increase the value, and to capture that value when they are ready to exit. Click on the link below to schedule a time when we can discuss your goals.
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