M&A Science

Roll Up Strategy in Private Equity

Apr 15, 2024

Gerry Williams, Partner at DLA Piper US LLP, discusses the roll up strategy in private equity, focusing on industries susceptible to this approach, challenges of execution, negotiating LOI, typical deal structures, and employing earnouts. The episode delves into the complexities, risks mitigation, and managing multiple roll up businesses in the industry.

58:30

Creator website

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Roll-up strategy in private equity involves acquiring small businesses in fragmented industries to create a larger, more valuable platform for eventual sale.

Health services and commercial services are commonly targeted industries for roll-up strategies in private equity deals.

The shift towards service-oriented businesses in roll-up strategies reflects the untapped growth potential and scalability in lower-middle market sectors.

Deep dives

Understanding the Roll-Up Strategy

One of the main topics discussed in the podcast episode is the roll-up strategy in private equity. Gary Williams, a partner at DLA Piper, shared his experience in representing private equity funds engaging in buying and selling companies globally. He highlighted the significance of focusing on transactions that involve multiple countries, implying more complexity and challenges, which can make deals more intriguing.

Introduction

2min

Exploring Roll-Up Strategies in Private Equity

14min

Challenges in Accounting and Working Capital in Private Equity Deals

20min

Structuring Private Equity Deals Below $25 Million

12min

Unconventional Aspects of Drafting L.O.I.s in M&A Deals

2min

Navigating the pitfalls of private equity roll-ups

7min

Closing Remarks and Call for Feedback on M&A Insights

2min

Gerry Williams, Partner at DLA Piper US LLP and a member of their management committee.

Private equity firms are established for the sole purpose of generating substantial financial returns for its investors. And one of the most effective ways of maximizing investment returns is the roll up strategy. This involves buying small-sized businesses in a highly fragmented industry and combining them into a larger platform. The goal is to improve efficiency and be sold later for a higher price.

In this episode of the M&A Science podcast, we will discuss roll up strategy in private equity with Gerry Williams, Partner at DLA Piper US LLP.

Things you will learn this episode:

• Industries susceptible to roll up strategy

• Challenges of executing roll up strategy

• Negotiating the LOI in roll up strategy

• Typical deal structure in roll up strategy

• Employing Earnouts in roll up strategy

This episode is sponsored by FirmRoom

FirmRoom provides 80% cost savings over VDRs that bill by page and delivers a far better user experience to boot. Sign up in under 2 minutes by going to firmroom.com

******************

Episode Bookmarks

00:00 Intro

04:06 Industries susceptible to roll up strategy

06:22 The trend of roll up strategy in private equity

10:42 Complexities of Roll up strategy

15:52 Challenges of executing roll up strategy

20:32 How to mitigate risks

24:19 Managing multiple roll up businesses

26:49 Negotiating the LOI in roll up strategy

33:00 Breakup fees on private deals

35:57 Typical deal structure in roll up strategy

43:24 Employing Earnouts in roll up strategy

48:07 Unique negotiations during LOI

49:31 Do’s and Don’ts of executing roll up strategy

52:57 Craziest thing in M&A

Remember Everything You Learn from Podcasts

Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.

M&A Science

Roll Up Strategy in Private Equity

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Understanding the Roll-Up Strategy

Industries Frequently Rolled Up

Evolution of Roll-Up Strategy towards Services

Challenges in Roll-Up Deals

Lessons Learned from M&A Experiences

Remember Everything You Learn from Podcasts