Cambridge Business Association
The Power of Buy and Build
Report

The Power of Buy and Build

How Private Equity Firms Fuel Next-Level Value Creation

Michael Brigl, Axel Jansen, Bernhard Schwetzler, Benjamin Hammer and Heiko Hinrichs
Boston Consulting Group, 2016
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

“Buy-and-build” deals – wherein add-on acquisitions follow the initial purchase of a company – have become private equity firms’ widespread approach to improving portfolio returns. This revealing, highly detailed research report from the Boston Consulting Group and the HHL Leipzig Graduate School of Management examines the circumstances in which buy-and-build strategies are most successful. getAbstract recommends it to private equity investors, entrepreneurs and finance professionals.

Summary

Reducing leverage, growing revenue and increasing margins all contribute to the success of companies in the portfolios of private equity (PE) firms. But ever-higher expectations for profit growth have propelled PEs to expand the value of their portfolios through the use of merger and acquisition strategies: 91% of surveyed PEs conducted M&A deals in 2012. One M&A tool is the “buy and build” – wherein PE firms follow the purchase of a company with complementary add-on acquisitions. A research study of 2,372 PE transactions between 1998 and 2012 found that...

About the Authors

Michael Brigl and Axel Jansen work at the Boston Consulting Group. Bernhard Schwetzler, Benjamin Hammer and Heiko Hinrichs work at the HHL Leipzig Graduate School of Management.

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