Is your product or service seen as interchangeable with your competitors? If so, you might be sitting on a ticking time bomb. In the world of mergers and acquisitions, “commodity” is a dirty word. Acquirers argue that without a strong competitive moat, these businesses are just one step away from a price war that will squeeze margins and crater valuations.
But how much does differentiation really matter?
Analysing data from over 80,000 business owners who completed the Value Builder Score Report the findings are crystal clear:
📈 The average business gets an offer of 3.9 times its pre-tax profit.
👑 But companies with a monopoly on what they sell—achieved through powerful differentiation—see that multiple jump by 25%.
✉️ What’s more, these differentiated businesses are 40% more likely to receive an acquisition offer in the first place.
That premium is powerful, especially when you’re selling something everyone thinks is a commodity. Just ask Rich Galgano.
Case Study: Turning Wire Into a Brand
Rich Galgano built Windy City Wire in one of the most commoditised categories imaginable: low-voltage wire. His product was the same copper everyone else sold. There was nothing proprietary about the material itself.
Instead of fighting a losing battle on price, Galgano focused on solving the small, nagging problems his customers faced every day.
Innovation 1: The Colour-Coded Breakthrough
His first insight was brilliantly simple. While high-voltage wire was colour-coded for safety, no one had applied that logic to low-voltage wire. Galgano introduced colour-coding, making installations faster, easier, and less error-prone for contractors.
He didn’t change the wire, but he completely transformed the experience of using it. Suddenly, his “commodity” saved customers time and money on the job site.
Innovation 2: Building a Moat Around a Box
Galgano’s next innovation tackled delivery and handling. Traditional wire spools were bulky, tangled easily, and created waste. He developed and crucially patented a packaging system that allowed wire to be pulled cleanly and consistently.
The wire was still the same. But the patented box made contractors’ lives easier and prevented competitors from copying his system. That packaging became his competitive moat, protecting his margins and cementing his brand’s reputation for innovation.
Over time, Windy City Wire became the go-to supplier for major contractors and Fortune 500 companies – not because the wire was different, but because the entire experience was superior.
The result? When Galgano sold the business, it had achieved 32 consecutive years of EBITDA growth and fetched a price tag of just under £400 million.
The Takeaway: Stop Selling Products, Start Solving Problems
Galgano didn’t reinvent the wire; he reimagined its delivery. He turned a commodity into a category leader by obsessing over his customers’ friction points.
If you feel stuck competing on price, ask yourself:
- What slows my customers down?
- What hassles do they tolerate that I could eliminate?
- How can I improve the experience of using my product or service?
Solving those problems is what builds a brand, creates a moat, and convinces buyers to pay a premium.
What’s a “small” friction point in your industry that is waiting for a big solution?
See your business from the viewpoint of an acquirer with your own Value Builder Report in 10-12 minutes with my compliments.