Understanding the Concept of Roll Up in Business

To grow cash flow or profit margins, acquiring competitors or adjacent companies to increase market share is a common strategy. Strategic acquisitions, like vertical integration or purchasing vendors for cross-selling, can also yield synergistic outcomes. Acquisitions may also be driven by the desire to prevent competitors from gaining emerging technology. Many dealmakers are investors or business owners looking to diversify their portfolios. Business-to-business transactions often involve roll-ups, where multiple businesses are combined. The value of the merged entities increases as the total annual profit rises, attracting different buyers based on earnings before interest, taxes, depreciation, and amortization (EBITDA).