Strategy
Buy and build is a strategy where an investor buys a platform company and then adds smaller companies to it, creating one larger and stronger business.
Buy and build means growing through a series of purchases. An investor buys a platform company first. It then adds smaller add-on acquisitions over time.
For example, a firm buys a services company with $5 million of EBITDA. Over time it adds four smaller firms with $1 million each. The combined company is bigger, serves more customers and can spread costs over a wider base.
This strategy works best in a fragmented industry, where many small firms exist and none dominates. For owners, it opens two doors. You can sell your company as a platform or join one as an add-on.
Capstreet's Capvalue Framework® includes the step "Execute buy and build strategy". The firm also reports "50+ Platform Acquisitions" and "200+ Add-on Acquisitions". Read the full pillar at buy and build strategy.
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