“Mike Malatesta, founder of Advanced Waste Services, wasn’t planning on selling his business when a strategic buyer approached him. The offer was too good to pass up so Mike decided to sell his business,” shares Sam Thompson a Minneapolis business broker and the president of M&A firm Transitions In Business. “There are many excellent tips on what to do and not to do in this story when selling. Hear how Mike made a $4M mistake during the process.”
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.