Buy And Build
Buy And Build a strategic acquisition approach where a company purchases a platform business to systematically acquire and integrate additional companies in the same or adjacent markets.
This strategy allows companies to rapidly expand market share, eliminate competition, and create operational efficiencies through strategic consolidation.
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How Buy And Build Works
Buy and build is a sophisticated acquisition strategy primarily used by private equity firms and strategic acquirers in the lower middle market. It involves identifying a strong foundational company (platform) and then systematically acquiring additional businesses to create a larger, more valuable entity.
The strategy typically unfolds in three key phases: first, acquiring a platform company with strong fundamentals; second, making strategic add-on acquisitions to expand market presence; and third, preparing for a high-multiple exit after building significant scale and operational efficiency.
What makes buy and build particularly powerful is its ability to transform fragmented markets. By consolidating smaller companies under a unified strategy, acquirers can create substantial value that exceeds the sum of individual business parts.
Key Points
- •Platform companies typically receive the highest purchase multiples
- •Add-on acquisitions are integrated to build operational scale
- •Exit strategies aim to sell the consolidated entity at a premium multiple
- •70% of lower middle market private equity deals involve buy and build
- •Success depends on strategic target selection and effective integration
Frequently Asked Questions
Related M&A Concepts
Platform Company
The foundational business in a buy and build strategy that serves as the primary vehicle for future acquisitions.
Learn moreAdd-On Acquisition
Secondary acquisitions made after the initial platform company purchase to expand market presence and operational scale.
Learn moreMarket Consolidation
The process of combining multiple smaller businesses into larger, more competitive entities.
Learn morePrivate Equity Strategy
Systematic approach to acquiring, improving, and selling businesses to generate investment returns.
Learn moreReady to Move Forward?
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