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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.

Take-Aways

  • A study shows that “buy-and-build” deals – wherein private equity (PE) firms follow the purchase of a company with complementary add-on acquisitions – yield higher returns than stand-alone transactions.
  • Buy-and-build strategies generate those returns through improvements to the operations of businesses in a PE firm’s portfolio.
  • Overall, the best buy-and-build results occur when the portfolio company is small or medium-sized, and when the PE firm has extensive experience in managing operations and conducting M&A.

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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