Hi all, we’re seeking some feedback on a roll up strategy, the we intend to sell to PE or a Family Office (or similar). Our target is $50m gross revenue at 10-15% EBIT, across 5-8 companies over the next 3-5 years, either vertically or horizontally integrated.

We’re gathering feedback on the most appealing structure for the end Buyer. Please reply if you have experience on the buy side at one of these types of institutions.

Question 1 of 2: Which option below is most appealing to a Buyer?

  • Option A - we purchase companies outright, place them under the rollup. (Issue here is cash out of pocket, tax implications, possible SEC compliance).

  • Option B - set up companies for simultaneous close where they agree to the roll up on contingency of finding a Buyer. (This reduces exposure, but we don’t want the Buyer to ‘pick and choose’).

Question 2 of 2: Can we leave companies running independently (for simplicity) or will buyers demand consolidated cost centers?

The pitch is that the Buyer can consolidate systems/processes across the network, quickly realizing increased profitability.

Feedback is greatly appreciated!