Transforming a distributor or reseller into a valuable company may seem like a daunting task.

Distributors are usually not worth very much because an acquirer reasons that without a point of differentiation, a distributor is vulnerable to a price war. Rather than acquire a target company, a savvy potential acquirer of a distributor could temporarily lower their price for whatever is being distributed and woo most of the target company’s customers without acquiring the company.
However, the key to this transformation lies in setting yourself apart through innovation and the development of intellectual property (IP).

The Value of Developing Your Own IP
Look at the story of Miles Faulkner, the founder of Blended Perspectives, a reseller specializing in Atlassian products, which offer software solutions for large teams. Faulkner’s story provides a blueprint for how to punch above your weight when selling a business that distributes or resells other companies’ products.

Driven to create a more valuable reseller, Faulkner set his sights on creating a product of his own: the Marketplace Analytic Research Service, or MARS. This tool is designed to guide Atlassian users in selecting the most appropriate aftermarket apps to supplement their Atlassian software.

While Blended Perspectives still made the lion’s share of their money by reselling Jira and Confluence licenses, MARS provided Blended Perspectives with a unique selling proposition, separating it from the multitude of other Atlassian resellers and, in the process, enhancing its appeal to prospective clients. MARS also rendered Blended Perspectives an attractive acquisition target for Contegix, a larger reseller of Atlassian products.

At the time Contegix acquired Blended Perspectives, observers may have wondered why the larger firm didn’t simply lower its prices temporarily to attract Blended Perspectives’ customers. However, for Contegix, the acquisition was not just about growing market share; Blended Perspectives brought a differentiating element to the table.

By owning MARS, their intellectual property, Blended Perspectives was more than just a distributor in the Atlassian ecosystem. This point of differentiation gave Contegix a compelling reason to acquire the firm far above what would typically be paid for a distributor, underlining the value of creating unique products and services in a highly competitive marketplace.

How a Parts Distributor Became a Valuable Company
Another example of someone who went from middleman to eight-figure business is Mahul Sheth. Sheth started VMS Aircraft in 1995 as a distributor of airline parts. He offered a “one-stop shop” for airlines and their maintenance crews to find parts and accessories.
VMS was the local distributor and survived on gross margins of 22–23%. It was a subsistence living, and Sheth was determined to build a more valuable company. He decided to evolve his value proposition from just being the local warehouse for distributing other people’s stuff to a sophisticated provider of advanced materials. Sheth chose to focus on the materials that airlines need to be stored and handled meticulously. If the safety of your metal tube flying 300 people 40,000 feet in the air is determined by the quality of a seam of metal, you want that steel to be handled carefully. You also want the sealant that joins the sheet of metal kept at a temperature that maximizes its adhesiveness. You may also want your rivets stored with the same care a surgeon uses to put away her scalpel after performing life-saving surgery.

Sheth invested in a clean room that minimized dust at his facility. He bought dry ice containers so certain materials could be stored in a cold environment, maximizing their effectiveness. He also repackaged materials into smaller containers so that an airline that only needed a small amount of a particular material didn’t need to buy an entire tub.
Sheth’s evolution from simple reseller to value-added provider fueled his gross margins to 60–70%. Along the way, Sheth attracted a French company that wanted to enter the U.S. market. Rather than set up shop to compete with Sheth, they realized VMS had created a unique offering with a layer of value-added services that would be difficult to imitate. They decided to acquire VMS for 7.4 times EBITDA.

In Conclusion
If you’re a business owner operating in a highly competitive field like distribution, it’s crucial to pinpoint your unique selling proposition and dedicate resources to developing your own intellectual property. These strategies not only augment your business’s value but also strategically position it for potential acquisition down the line.

Find out how you score on the 8 factors that drive your company’s value and an action plan for how to improve your score on each by completing the Value Builder Score questionnaire.

Why Do Israeli Distribution Businesses Struggle to Command Premium Valuations?

Israel’s economy is built on trade, import, and distribution networks that connect global manufacturers with local markets. From industrial equipment distributors in the Haifa port area to consumer goods resellers operating out of Tel Aviv and Petah Tikva, thousands of Israeli companies operate as middlemen. The problem is structural: without a defensible point of differentiation, an Israeli distributor is exposed to the exact same risk described above — a competitor or supplier can simply undercut prices and bypass the distributor altogether. For Israeli CEOs looking toward an eventual exit or simply wanting a business that isn’t dependent on razor-thin margins, the lesson from Faulkner and Sheth is directly applicable: build something proprietary that customers and acquirers cannot easily replicate.

How Can Israeli CEOs Apply These Lessons in Tel Aviv and Jerusalem Markets?

Whether you run a distribution business in Tel Aviv’s dense commercial ecosystem or serve institutional and government clients out of Jerusalem, the same principle holds: value is created where competition is minimized. Israeli CEOs should ask themselves hard questions — Can a supplier bypass me tomorrow? Does my business own any data, software, process, or relationship that a competitor cannot copy? Building a small piece of proprietary IP, even a modest analytics tool, a certification, or a value-added service layer, can transform how acquirers and investors perceive a distribution business. This is precisely the type of strategic thinking that peer advisory boards are designed to sharpen.

What Is the Fastest Way to Identify a Distribution Business’s Unique Selling Proposition?

Many distributors never step back to objectively evaluate their own vulnerabilities because they are consumed by day-to-day operations — logistics, supplier negotiations, and customer service. This is where an outside, structured perspective becomes invaluable. Sitting with a group of non-competing business owners who ask direct, unfiltered questions often surfaces blind spots that internal teams miss. A well-facilitated peer advisory board gives Israeli business owners exactly this kind of accountability and outside perspective, forcing the owner to confront the question: “What would happen to my revenue if my main supplier cut me out tomorrow?”

How Does TAB Israel Help Distribution Business Owners Increase Company Value?

The Alternative Board (TAB) has operated globally for more than 35 years, across 20+ countries, helping business owners build more valuable, more resilient companies. In Israel, TAB is led by Nir Makovsky, a Master Facilitator based at TAB Israel’s headquarters in Petah Tikva. Nir Makovsky works directly with Israeli CEOs — including owners of distribution, import, and reseller businesses — to identify the specific value drivers holding their company back, using proven frameworks like the Value Builder System referenced above. To understand the full methodology behind TAB Israel’s approach, business owners can explore why TAB works for companies across every sector, including distribution.

What Should a Distribution Business Owner Expect from a TAB Board Meeting?

A TAB board typically brings together 8–12 non-competing business owners who meet monthly, facilitated by a trained professional, to review each member’s real business challenges. For a distribution business owner, this might mean presenting a pricing pressure problem, a supplier dependency risk, or an early-stage idea for a proprietary service — and receiving direct, experience-based feedback from other CEOs who have faced similar issues. Combined with one-on-one coaching sessions, this structure creates the accountability that many owners need to actually execute a differentiation strategy rather than simply talk about it. Learn more about how these sessions are structured on the TAB Israel board page.

Why Do Facilitators Matter When Building a More Valuable Business?

The quality of a peer advisory experience depends heavily on the facilitator running it. TAB Israel’s facilitators are trained to guide conversations toward measurable outcomes — not just discussion, but action plans, follow-up, and accountability. For a distribution business owner trying to shift from commodity reseller to value-added provider (as Mahul Sheth did with VMS Aircraft), a skilled facilitator can help break down the transformation into practical, sequenced steps: identifying the IP opportunity, testing it with existing customers, and building it into the company’s value proposition over 12–24 months.

Can Startups and Early-Stage Distribution Companies Benefit from This Approach?

It’s a common misconception that peer advisory boards are only for mature companies. In reality, early-stage distributors and resellers benefit even more from building differentiation early, before margin pressure sets in. Israeli founders launching import or distribution ventures should think about proprietary value from day one rather than retrofitting it later. TAB Israel’s dedicated resources for startups address exactly this stage of the journey, helping founders avoid the trap of building a business with no defensible position.

How Does Joining a Peer Advisory Board Actually Increase Company Value?

The connection between peer advisory membership and increased company value is not theoretical — it is measurable. Business owners who participate in structured peer boards report faster decision-making, clearer strategic priorities, and greater accountability to execute on growth plans. For a distribution business, this often translates directly into the kind of IP development and value-added services described in the Faulkner and Sheth examples above. Israeli CEOs ready to take this step can explore how to join a TAB board and begin the process of transforming their business from a price-vulnerable distributor into a strategically valuable company.

Who Is Behind TAB Israel and Why Does Experience Matter?

TAB Israel is part of a global network with more than 35 years of history and a presence in over 20 countries, giving Israeli members access to proven frameworks tested across thousands of businesses worldwide. Locally, the organization is led by Nir Makovsky, a Master Facilitator headquartered in Petah Tikva, who brings this global methodology to Israeli CEOs in a way that reflects the realities of doing business in Israel — from navigating supplier relationships with international manufacturers to competing in dense local markets across Tel Aviv, Jerusalem, and beyond. To learn more about the organization’s mission and track record, visit the About TAB Israel page.

What Financial Metrics Should Israeli Distribution CEOs Track Before Considering a Sale?

Before approaching an acquirer or investor, Israeli distribution business owners should look beyond top-line revenue and gross margin. Acquirers evaluating a distributor in Israel — whether a local strategic buyer or an international company looking to enter the market through Tel Aviv or Haifa — will scrutinize customer concentration, contract length with suppliers, recurring revenue percentage, and any proprietary tools or data assets. A distributor with 80% of revenue tied to one supplier relationship, for example, will always be valued at a discount, regardless of profitability. Tracking these metrics quarterly, rather than only at the point of a planned exit, gives Israeli CEOs the runway needed to correct structural weaknesses well in advance. This is exactly the kind of financial discipline the Value Builder Score questionnaire referenced above is designed to surface.

How Long Does It Typically Take to Transform a Distribution Business Into a Value-Added Company?

Based on real-world cases like Mahul Sheth’s VMS Aircraft, meaningful transformation from commodity distributor to value-added provider generally takes between 18 months and three years — not a quick fix, but a deliberate, staged process. The first stage typically involves identifying which part of the customer journey is underserved (storage, handling, selection, data, compliance). The second stage involves building a minimum viable version of that value-added service and testing it with existing customers. The third stage involves formalizing it into the company’s pricing and positioning. Israeli CEOs who attempt this transformation alone often stall at stage one, simply because there is no external accountability forcing progress. This is one of the most practical reasons Israeli business owners join a structured peer advisory board — it converts a vague intention into a tracked, monthly commitment.

What Common Mistakes Do Israeli Distributors Make When Trying to Differentiate?

In working with Israeli CEOs across sectors, several recurring mistakes show up when distribution businesses attempt to build differentiation. First, many owners try to compete purely on service quality — faster delivery, friendlier staff — which is valuable operationally but rarely defensible or acquirable as IP. Second, owners often build a proprietary tool internally but never formalize it as a distinct product with its own name, pricing, or marketing, meaning the market never perceives the company differently. Third, many Israeli distributors underinvest in documenting their processes, meaning that even when real value-added expertise exists (as with Sheth’s cold-chain handling protocols), it remains tacit knowledge rather than a transferable, sellable asset. Avoiding these mistakes is far easier with outside perspective, which is why TAB Israel emphasizes structured accountability over ad hoc advice.

How Does TAB Israel’s Global Network Benefit a Local Distribution Business?

Because TAB operates in more than 20 countries with over 35 years of collective experience, Israeli members of a local board indirectly benefit from case studies, frameworks, and outcomes tested across a far broader range of industries and markets than any single Israeli sector could provide on its own. A distribution business owner in Petah Tikva working through a supplier dependency problem, for example, benefits from frameworks refined across thousands of similar businesses internationally, adapted by Nir Makovsky and TAB Israel’s facilitators to fit the specific dynamics of the Israeli market — including relationships with overseas manufacturers, currency exposure, and the compact, highly networked nature of doing business between Tel Aviv, Jerusalem, and the rest of the country.

Find out how you score on the 8 factors that drive your company’s value and an action plan for how to improve your score on each by completing the Value Builder Score questionnaire.

 

 

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Frequently Asked Questions: Increasing the Value of a Distribution Business