ROLL-UP STRATEGY APPLICABLE TO TRADITIONAL SEARCH FUND?
I am new to search fund and would like to get feedback on whether the roll-up strategy has been used or is being considered for traditional search fund. To me, the ability to use roll-up can help in several ways:
(1) Lower multiples during acquisition by 20+% therefore setting a solid economic foundation on top of improvements the operator will do. I'm not in for a quick multiple arbitrage. I'm in for the long term "buy then build"!
(2) Grow the business via consolidation to gain competitive strength and improve financials with synergy benefits.
(3) Faster route to exit in a higher multiple space. This is closer to pure multiple arbitrage by "bolt-on". Not my main focus. I think it's a benefit if combined with successful operational improvements the principle plans to execute anyway.
After searching the forum here, it appears roll-up has been used in self funded searches and acquisitions but I haven't seen any traditional search embracing this. I suppose the main obstacle is the complexity such as equity dilution handling? It's complex enough for 10+ investors and principles to align on one acquisition?
Any innovators out there attempting to capture the above benefits (and more that I haven't thought of) with search best practice improvements? Is the search fund industry constantly evolving and open to new ideas?