How to Jack Up the Value of a Commoditized Business
If you sell something the market sees as interchangeable, your business may be worth less. Acquirers often argue that without a competitive moat, commoditized companies are sitting ducks for a price war. Margins get squeezed. Valuations drop.
After completing the Value Builder Score Report, more than 80,000 owners have received an estimate of their company’s value. That data—one of the largest private databases of its kind—offers a clear view into what drives acquisition offers.
The average small business gets 3.9 times pre-tax profit. But when a company has a monopoly on what it sells—because it has clearly differentiated its product or service—that multiple jumps by 25%. These businesses are also 40% more likely to get an offer in the first place.
That premium is especially valuable when you’re selling a commodity. Just ask Rich Galgano.
Turning Wire Into a Brand
Rich Galgano built Windy City Wire in one of the most commoditized categories imaginable: low-voltage wire. His product was the same copper everyone else sold. There was nothing proprietary about the material itself. But instead of competing on price, Galgano focused on solving small, nagging problems for his customers.
His first breakthrough was color-coded insulation. While high-voltage wire had long been color-coded for safety and identification, no one had applied the same logic to low-voltage wire—until Galgano. By introducing color-coding to the low-voltage segment, he made installations faster, easier, and less error-prone for contractors and electricians.
It didn’t change the product, but it completely changed the experience of using it. Suddenly, his wire saved time and reduced costly mistakes on job sites. For his customers, that meant real money. For Galgano, it meant repeat business.
The Moat Is in the Delivery
Galgano’s second innovation came in the form of a box. Traditional wire spools were bulky, inefficient, and prone to tangling. He developed a packaging system that made it easier to pull wire cleanly and consistently on job sites—and then patented it.
The wire itself hadn’t changed. But now it came in a form that made contractors’ lives easier. And because the system was patented, competitors couldn’t copy it. That packaging became a moat, protecting his margins and reinforcing the brand’s reputation for reliability.
Over time, Windy City Wire became the preferred supplier for major contractors and Fortune 500 companies—not because the wire was different, but because the experience was.
When Galgano sold the business, it had grown EBITDA for 32 consecutive years and fetched just under $500 million from a strategic buyer.
The Takeaway
Galgano didn’t reinvent the wire. He reimagined how it was delivered. That’s what turned a commodity into a category leader.
If you sell something the market sees as undifferentiated, focus on the friction. What slows your customers down? What do they tolerate that you could fix? Solving those problems is what creates value—and gets buyers to pay a premium.
