What is a roll up?
A rollup chain is a series of Acquisitions as part of a business scale up and you’re assembling a larger company over time as a way to grow and you’re using Acquisitions to do it.
Tell us how many rollups have you been a part of?
Probably 40 or 50 over the past 34 years across many different Industries.
Explain what you mean by an underlying logical strategy?
So, the underlying logical strategy means why does it make sense to get bigger through acquisition it’s risky to do Acquisitions so if you’re going to go that route your decision needs to be informed by a logical and a convincing strategy as to what you can do better than these smaller companies are currently doing on their own. So, you’re getting many people think rollups can be applied to any type of business but you really have to say you’re getting the question is we’re getting larger for the sake of what, what strength does the company have that you can translate to a larger company so what do you do better than pretty much everybody else out there that you can leverage that on these companies that you’re going to bring into the fold a lot of business owners that do rollups they don’t wrestle with that fundamental underlying logical strategy they don’t think about you really have to look internally and self-assess very diligently to come to that answer before you decide to go forward with the rollup.
So, in your view how do you establish an underlying logical strategy?
It’s sort of almost an extension of the quote to thine own self be true you have to identify your unique strength and the senior management needs to do planning sessions on it then you need to have an independent consultant go out into the marketplace to really get the Market’s view of what you’re good at so you have sort of an internal View and an external view so you want to really get a a solid grasp on what it is you’re great at, you also have to see what other people have done in the industry a lot of Industries have had enormous rollup excursions by private Equity groups and by Founders you want to know which ones have worked and why which ones have failed and why and you need to have a very strong command over what your strength is and not just saying you know we’re good at this but how are you able to expand that strength in a way that as you bring in the these other companies that strength will be consistently applied across the larger organization um I think a great source of input is to talk to mergers and acquisition advisers to talk to Capital advisers to talk to accountants that do Consulting work and I would say that in my experience the rollups that have worked have always been situations where there’s been at least two special things that an acquirer can bring to the acquired company it can’t be one thing it can’t be hopes and dreams it has to be two solid identifiable things that the acquirer can execute if it’s at least two you have a very good chance of having a successful rollup.