Best But Never Final: Private Equity's Pursuit of Excellence

Private Equity’s Consolidation Strategy: Keys to Success in Fragmented Markets

May 27, 2025

Discover how consolidation strategies can drive value in fragmented markets. Doug McCormick shares his insights on building successful buy-and-build platforms, highlighting lessons from the lawn care industry. Learn the importance of market selection and developing a proven investment thesis. Explore strategies for engaging owner-operators and the benefits of scaling operations efficiently. The conversation sheds light on managing mergers, fostering trust, and driving sustainable growth in private equity.

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INSIGHT

Thesis Development on Market and Geography

Identifying market white space is crucial for consolidation success in fragmented markets.
Geography and asset density are key factors in managing consolidation span and scalability.

ADVICE

Start With Platform Before CEO

Start consolidation efforts by building a platform with a few acquisitions before hiring a CEO.
This approach helps attract experienced leaders by showing credibility and a working playbook.

ADVICE

Collaborate With Leaders On M&A

Engage leadership teams early by evaluating acquisition opportunities together.
Shared learning reduces false commitments and improves decision-making quality.

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Consolidation strategies are a proven way to create value in fragmented markets, but execution is everything. In this episode, Doug McCormick walks through the key principles of launching and scaling a buy-and-build platform, sharing lessons learned from a real-world example in the lawn care industry. Joining Sean Mooney and Lloyd Metz, Doug dives into the essential elements of consolidation success, from developing the investment thesis to building scalable infrastructure and engaging entrepreneurial owners.

The team explores topics like market selection, integration strategies, and how to position a business for the next phase of growth. If you’re considering consolidation strategies or looking to optimize your existing approach, this episode is packed with insights for private equity professionals and business leaders alike.

Episode Highlights:

2:21: Defining core focus areas for consolidation: Subscription revenue, recurring services, and market potential.

3:38: Regional dynamics: Why geography matters and how to build density before scaling nationally.

4:41: Developing a proven investment thesis: Recognizing white space in competitive markets.

9:26: Building the flywheel: How initial acquisitions set the foundation for growth.

16:09: Keeping owner-operators engaged: Strategies for rolling equity and aligning interests.

24:02: Unlocking the benefits of scale: Efficiency in purchasing, customer acquisition, and operational KPIs.

33:37: Integration best practices: Building internal capabilities and avoiding common pitfalls.

36:51: Creating long-term buyer appeal: Building a platform that’s scalable and ready for future growth.

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