Nikonomics - The Economics of Small Business 212 - Roll-Ups vs. Holdcos: Understanding the Key Differences and Benefits with Dzmitry Miranovich
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Aug 1, 2025 Dzmitry Miranovich, an investment professional building a roll-up in the veterinary clinic sector with over 20 locations, shares valuable insights. He clarifies the distinctions between roll-ups and holding companies, emphasizing market fragmentation's role in successful roll-up strategies. Dzmitry discusses evaluating cash flow in veterinary clinics and the significance of cultural alignment during acquisitions. He also examines investment tailwinds in healthcare and pet industries, offering practical advice for navigating market complexities while driving operational value.
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Holdcos vs. Roll-Ups Defined
- Holdcos own diverse businesses with independent operations and usually have corporate overhead.
- Roll-ups acquire multiple similar businesses in the same industry to create synergy and leverage operational efficiencies.
Industry Fragmentation Matters
- Choose industries that are fragmented with many small businesses for roll-up potential.
- Avoid industries where over 50% is already consolidated to ensure a meaningful consolidation runway.
Quantify Consolidation Runway
- Calculate consolidation runway by dividing unconsolidated market units by annual sale volume.
- Aim for at least a 10-year runway to support sustainable roll-up growth and multiple arbitrage.