An investor faced with an opportunity to invest in two competing companies may reduce risk by simply investing in both and merging them. Rollups are often part of the shakeout and consolidation process during an economic downturn or as new market sectors begin to mature.
The challenges and opportunities when investing in rollups
2. For all those not familiar with rollups….. A rollup is a technique
used by investors where multiple small companies in the same
market are acquired and merged.
The principal aim of a rollup is to reduce costs through
economies of scale. Rollups also have the effect of increasing
the valuation multiples the business can command as it acquires
greater scale.
Rollups may also have the effect of rationalizing competition in
crowded and fragmented markets, where there are often
many small participants but room for only a few to succeed.
3. An investor faced with an opportunity to invest in two
competing companies may reduce risk by simply investing in
both and merging them.
Rollups are often part of the shakeout and consolidation
process during an economic downturn or as new market sectors
begin to mature.
Rollups of complementary or unrelated companies are also
done to
4. Build a full-capability company, when it would be too costly or
time consuming to develop the missing pieces through internal
expansion.
Blending companies have different financial metrics, often to
make the combined company attractive for
investment, mergers and acquisitions, or an initial public
offering.
5. With plenty of family office money sitting on the sidelines
awaiting for each other’s next move, we at Blackhawk Partners
are zeroing in today on two specific plays (Private Placement
Investment Programs and Private Equity Roll-ups) to attract the
“smartest” money out there to the fore and have so far
gathered since the beginning of the year over $640 million in
assets in this regard
While the benefits of Private Placement Investment
Programs have been widely discussed in the previous
blogs, we thought of elaborating in here why Private Equity
Roll-ups is our favorite way of acquiring companies along
with the challenges and opportunities we face every day
using this acquisition technique.
6. Read More:
Challenges and Opportunities we see when investing in rollups
http://www.blackhawkpartners.com/Blog.aspx?id=17/On-theChallenges-and-Opportunities-we-see-when-investing-in-rollups
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