A business can grow in many ways. The classic model is organic growth: Grow your sales, grow your marketing over time, and do more and more with your business. But that traditional model doesn’t always work so well. Sometimes you need to do something else. That’s where mergers and acquisitions can be a valuable tool.
If you excel at mergers and acquisitions repeatedly, you can do what’s called a “rollup.” A rollup is a tool that is rarely used but can be extremely valuable to unlock growth. If you’re great at something, and can build the systems and processes, and go through the pain of integrating companies you acquire under your brand, a rollup strategy can be a fantastic way to quickly increase the scale of your business.
When you already have strong systems and processes in place for your core business, you can look for targets that you want to acquire because they will contribute additional sales and revenue to your business. As you bring them in through your rollup strategy, you integrate them into your brand so revenue numbers quickly expand.
If you do this correctly, you drive down the expenses of the acquired company, increase its profitability, and create long-term value for it. The acquisitions need to be done the right way – very carefully – so you understand what you will acquire. There usually are headaches and heartaches on the backend. But, for the right company, the rollup can unlock so much value and can exponentially grow your business very quickly.
For a rollup, you need a team with mergers and acquisitions experience. You will want business advisors, systems folks and, of course, attorneys and accountants who can do the work necessary to carry out your strategy.
What are your thoughts on rollups? Have you or someone you know used the technique? Join us in the comments below and let us know about your experience.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Freeimages.com/Photographer Steve Knight.
About the Author
Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride or call (214) 418-0258.
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