An investor faced with an opportunity to invest in two
competing companies may reduce risk by simply investing in both and merging
them. Rollups are often part of the shakeout and consolidation process during
an economic downturn or as new market sectors begin to mature.
Rollups of complementary or unrelated companies are also
done to:
• Build a full-capability company, when it would be
too costly or time consuming to develop the missing pieces through internal
expansion.
• Blending companies have different financial metrics, often to make the combined company attractive for investment, mergers and acquisitions, or an initial public offering.
With plenty of family office money sitting on the
sidelines awaiting for each others next move, we at Blackhawk Partners are
zeroing in today on two specific plays (Private Placement Investment Programs
and Private Equity Roll-ups) to attract the “smartest” money out there to the
fore and have so far gathered since the beginning of the year over $640 million
in assets in this regard.
While the benefits
of Private Placement Investment Programs have been widely discussed in the
previous blogs, we thought of elaborating in here why Private Equity Roll-ups
is our favorite way of acquiring companies along with the challenges and
opportunities we face every day using this acquisition technique.
Read More: Opportunities when Investing in Rollups
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