A company with a ‘Buy & build’ strategy is one that seeks to grow at an accelerated rate through acquisitions, often driven by a private equity party. Literally, then, “Buy & build” means “buy & build. Smaller companies are merged into a larger company.
Often the basis is a scalable platform company whose internal processes are in good order. Companies are added to this enterprise, creating up- and cross-selling opportunities, for example. By offering broader portfolio to existing customers, sales can grow faster.
Typically, parties with a “Buy & Build” strategy are found in a market that is consolidating. In addition to sales growth, the buyer’s return on investment is achieved by realizing economies of scale. For example, in marketing & sales, support functions and purchasing.
The business valuation of larger market parties is also often more attractive due to the higher ‘multiples’ that can be applied. Therefore, when a ‘Buy & Build’ is active in your market, a company sale can often take place faster and at a good valuation.
A “buy and build” offers many opportunities but also has risks. It is therefore essential to carefully weigh the strategic choices in advance and review the planned steps with a corporate finance advisor. Our ´Buy and Build Handbook´ gives you tools to help you make these considerations.
e-Book: Buy and Build
Sometimes the sum is worth more than the parts, in which case a so-called “buy and build” strategy can be interesting. In a “buy and build” strategy, growth and long-term value are realized by acquiring and merging companies.
A “buy and build” offers many opportunities but also has risks. It is therefore essential to carefully weigh strategic choices in advance. This handbook gives you tools to get you started in making these trade-offs.
