June 7, 2024

As a business founder, it’s tempting to chase top-line growth and boost sales figures. However, focusing solely on revenue can sometimes attract low-quality revenue, potentially decreasing your company’s value. To potential acquirers, the quality of revenue is crucial. They prioritize predictable, recurring income from contracts and subscriptions over one-off sales. Companies with recurring revenue often command a higher valuation based on future income potential, whereas those relying on transactional revenue are usually valued based on a multiple of EBITDA.

The Lesson from Mike Winnet

Mike Winnet offers a powerful case study on the importance of prioritizing the right kind of revenue. Winnet founded Learning Heroes in the U.K. after noticing that most e-learning programs were lengthy and dull. He aimed to transform the industry by offering large companies subscriptions to his engaging, animated training courses.

Despite the company's growth, Winnet was struggling financially, drawing a modest salary of £500 a month. It was at this juncture that Google approached him with a lucrative offer. The tech giant proposed £90,000 for a custom course, a project that would have taken just three months to complete. For Winnet, this offer was tempting, as it would have provided a significant cash injection.

However, the Google offer was a one-time transaction and conflicted with Winnet's vision of building a company based on recurring revenue. “I know loads of people who would have taken that £90,000 contract, but we didn’t because it didn’t fit the model. We used to have a sign on the wall that said, ‘Does It Make the Boat Go Faster?’ and if the decision didn’t make the boat go faster, we wouldn’t do it,” he explained.

The Strategic Decision

Winnet understood that accepting Google’s offer could jeopardize his long-term goal of establishing Learning Heroes as a subscription-based e-learning powerhouse. He recognized that one-off projects could undermine the value of his company in the eyes of potential acquirers, who would view it as a service-based business rather than a product-based subscription business.

Winnet’s strategy was clear: build a company that could be sold within three years for £10 million. He knew that positioning Learning Heroes as a subscription business was essential to achieving such a premium valuation.

The Payoff

Winnet’s discipline and commitment to his vision paid off. He ultimately accepted an acquisition offer from Litmos for £8 million, which represented roughly four times his revenue at the time. Had he accepted Google’s project, he risked being viewed as a traditional service company, likely reducing his valuation significantly.


Winnet’s story illustrates the importance of prioritizing value over short-term revenue growth. By focusing on creating a business with predictable, recurring revenue, he was able to command a much higher valuation. This case serves as a reminder that the highest multiples are achieved by those who concentrate on growing their company's value, even if it occasionally means sacrificing immediate sales opportunities.

In conclusion, for founders looking to maximize their company's value, the key lies in building a business model centered on recurring revenue and predictable future income. This approach not only attracts higher valuations but also positions the company for sustainable long-term growth.

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Business Value Amplifier - Sept 18
Wendy Brookhouse

Wendy Brookhouse


Wendy has been getting people to their financial goals faster and easier than before for over a decade. She has known what it’s like to control cash flow from childhood, where her first job was raking blueberries for ten cents a pound.