Is Your Industry Next for a Roll-Up? Here’s How to Tell—and What to Do

For business owners considering their endgame, learning what makes a company valuable can feel overwhelming. Buyers prioritize factors like recurring revenue, a differentiated product or service, and a leadership team that operates independently from the owner. If a business doesn’t check every box, it can seem as though selling is perpetually just out of reach. But perfection is not a prerequisite for a sale. While improving the key drivers of value is important, an imperfect business can still be highly desirable to the right buyer. In fact, some acquirers actively look for businesses with fixable flaws because they see an opportunity to increase value. Blake Hutchison on Why Imperfections Can Be to an Acquirer’s Advantage Blake Hutchison, CEO of Flippa, has witnessed thousands of business acquisitions. Flippa is an online marketplace where business owners can buy and sell companies, particularly small to mid-sized digital businesses. The platform connects sellers with buyers looking for opportunities to grow or optimize an acquisition. In a recent Built to Sell Radio interview, Hutchison explained that many business owners assume their company won’t attract buyers because it has shortcomings. In reality, most acquirers aren’t looking for perfection—they’re looking for potential. Many buyers have a strategic advantage, whether it’s a strong distribution network, operational expertise, or access to capital, that allows them to take an imperfect business and make it more valuable. A prime example of this is the acquisition of PetCoach. How PetCoach Turned an Imperfection into a Selling Point PetCoach, co-founded by Brock Weatherup, was a two-sided marketplace designed to connect pet owners with veterinarians. The challenge for any marketplace business is keeping both sides in balance—generating enough demand from pet owners while ensuring there are enough veterinarians to meet that demand. PetCoach had built a strong product, but it lacked a broad distribution channel to acquire pet owners at scale. Without a solution, growth would remain limited. Instead of seeing this as a dealbreaker, Weatherup positioned it as an opportunity for the right buyer. That buyer was Petco. With more than 1,500 locations across the U.S., Mexico, and Puerto Rico, Petco had access to millions of pet owners. By acquiring PetCoach, Petco could instantly expand its offerings while solving PetCoach’s biggest challenge. Weatherup didn’t need to fix the scalability issue before selling. He needed to find an acquirer for whom the business’s weakness was actually a competitive advantage. Your Business Has Value—Even if It’s Not Perfect This doesn’t mean business owners should ignore the fundamentals of value creation. Strengthening factors like recurring revenue, customer retention, and operational efficiency will always increase a company’s attractiveness. However, not every issue needs to be resolved before an exit.  Instead of viewing imperfections as obstacles, business owners should consider how an acquirer might perceive them: A company struggling with customer acquisition may be a great fit for a buyer with an established customer base. A business with inefficient operations might attract an acquirer with expertise in streamlining processes. A company overly dependent on its owner could be appealing to a buyer with a strong leadership team ready to step in. As Blake Hutchison explains, acquirers are often looking for businesses where they can add value. The key is to position the company in a way that highlights its strengths while framing its imperfections as untapped potential. The right acquirer won’t see weaknesses as dealbreakers—they’ll see them as opportunities.

Supplier risk can erode the value of your company. When a potential acquirer examines your business, they look for red flags. A major one: relying too heavily on a single supplier—whether that’s a sole raw material provider or a platform like Amazon that controls your primary sales channel. If that key supplier vanishes or changes terms, your profits might vanish as well. This risk often leads to lower valuations in the eyes of buyers. Why Supplier Risk Hurts Valuation Over-dependence on one supplier—or on a single selling channel—makes you vulnerable. Buyers don’t like gambling on a business that hinges on factors outside the owner’s control. If an online marketplace tweaks its algorithm or suspends your account, your revenue may plummet. Acquirers see this fragility and adjust their offer downward. Adi Gullia’s Diversification Example Entrepreneur Adi Gullia saw this firsthand. He built his beauty brand, Grace & Stella, on Amazon’s platform. At first, it looked like a goldmine—his foot-peeling mask soared to $100,000 in monthly sales within nine months. Yet Adi recognized the risk. He knew Amazon could change rules or restrict listings at any moment, putting his entire business at risk. Instead of waiting for that to happen, Adi expanded. He forged relationships with subscription box partners to reach new customers outside Amazon’s control. Next he launched his own ecommerce site, selling directly to consumers. Adi also ventured into retail, signing a major deal with Target. These partnerships allowed him to diversify his revenue streams and build a more resilient business. Retailers like Target appreciated Grace & Stella’s success on Amazon, which served as proof of demand. By reducing his dependence on any single channel, Adi created a business that acquirers found far more appealing. The Impact on Valuation When it came time to sell, Adi’s diversification efforts paid off. His company fetched a valuation of 5.8 times EBITDA—a significant premium over what a typical Amazon reseller might expect. Most Amazon-only brands are valued at three to four times EBITDA, reflecting the higher risks tied to their reliance on the platform. Buyers of Amazon-centric businesses worry about potential account suspensions, de-listings, or increased competition driving down margins. Adi’s diversified revenue streams mitigated these risks, making his business more stable and attractive to acquirers. Practical Steps to Lower Supplier Risk 1. Add Channels : If you rely on one marketplace, consider starting your own ecommerce store. Test alternative platforms or retail partners. 2. Secure Multiple Suppliers : If raw materials come from one producer, find a backup or two. Even if your costs rise slightly, you’re buying peace of mind. 3. Build Direct Relationships : Capture customer data through your own site. Invest in ways to reach buyers directly—email, social media, subscriptions—so no single platform can cut you off from your audience. Conclusion Supplier risk is a value killer. Buyers pay less for a company balanced on a single weak pillar. Don’t let one supplier or one platform control your future. Take a page from Adi Gullia’s playbook. By branching out to retail with Target, leveraging subscription boxes, and launching an ecommerce site, he reduced his supplier risk. These moves not only stabilized his business but also helped him command a premium valuation. At 5.8 times EBITDA, Adi’s sale was far above the norm for Amazon resellers—proof that diversification strengthens both your business and its ultimate value.