For anyone who has done a roll-up:
February 04, 2021
by a searcher from Harvard University - Harvard Business School in New York, NY, USA
What were some of the most important business characteristics that made a company a successful roll-up target/acquisition?
from Brigham Young University in Kaysville, UT 84037, USA
Here are some thoughts from my research on what to look for in a consolidation play.
- Roll-ups should reinvent an industry not just have incremental advantage.
- Rollups should both reduce costs and drive growth.
- The roll-up entity should be more competitive than the many fragmented companies it competes with.
- The value created should be shared with customers (better quality, better pricing, or both) & employees.
- The superior value proposition will allow for accelerated organic growth.
- Key pieces to look for in a roll-up opportunity: Large market size, above average growth rate, extreme fragmentation.
- When a sellers business is more valuable to an acquirer then it's a good match for roll-up.
- Professional services generally are not a good candidate for a roll-up.
- Roll-ups historically have had massive success mixed with many instances of long term failure.
- My hypothesis for why some fail. When the roll-ups cashflow isn’t increased with roll-up activities by enough to offset the increased acquisition costs, costs of debt, costs of high level management, costs of technology, etc.
from The University of Michigan in Hyderabad, Telangana, India