Elevating the Worth of Your Distribution Business

A Guide to Innovation and Uniqueness

The journey of transforming a distribution or reselling company into a sought-after entity can sometimes seem like scaling Everest. “A distributor worth much?!” scoff at many acquirers because distributors are like sitting ducks in a price war without uniqueness.

Why buy when you can out-price them and sweep away their customers? The secret sauce to making your distributor an attractive target isn’t just about having a robust price strategy; it’s about setting yourself apart through innovation and creating your intellectual property (IP).

Crafting Value through Intellectual Property

Innovation — Image by Michal Jarmoluk from Pixabay

Take a leaf from Miles Faulkner’s book, the mastermind behind Blended Perspectives, a connoisseur in Atlassian products. As Faulkner once said, “Innovation distinguishes between a leader and a follower.” His story of creating the Marketplace Analytic Research Service (MARS) is like a tasty recipe for making your distributor business look gourmet.

Fueled by ambition, Faulkner developed MARS, guiding Atlassian users like a GPS for aftermarket apps. It set them apart from other Atlassian resellers like a rare truffle in a sea of mushrooms. Contegix, a more prominent reseller, recognized this unique value, making Blended Perspectives their catch of the day.

From Ordinary Distributor to a Valuable Asset

Switch gears and meet Mahul Sheth of VMS Aircraft, who turned his airline parts distribution business into an eight-figure empire. “Innovation takes us from being good to being excellent,” Sheth emphasizes.

Focusing on materials that demanded meticulous care, Sheth’s attention to detail saw his gross margins soar from a modest 22-23% to 60-70%. A French company lured by VMS’s unique offerings acquired them for a whopping 7.4 times EBITDA.

Concluding Thoughts: A Toast to Innovation

Toast to Celebrate — Image by Steven Cox from Pixabay

If you’re steering the ship of a business in the cutthroat field of distribution, remember, as Steve Jobs once said, “Innovation distinguishes between a leader and a follower.” Pinpoint your unique selling proposition, invest in your own IP, and watch your business grow in value and allure for potential acquisition.