The idea of a roll-up or consolidation strategy has been around for a long time. But that doesn’t mean the opportunity is not still readily available to be taken advantage of by private equity firms. Here’s what is new with the strategy.
“So one thing I would say that has changed is the breadth of the categories or the verticals that will also occur,” says Christopher Cain, a partner, business lawyer and co-chair of the transactions practice with Foley and Lardner. “It wasn’t that long ago when it was more sort of the unsexy businesses, whether it’s let’s say, garage door repairs and installation, auto body shops, manufacturing, smaller manufacturing companies, the uniform industry, the funeral home industry. That sort of stuff that happens in every city, but they aren’t the sexiest old glamorous.”
The sheer number of verticals that are seeing private equity roll-up attention has expanded dramatically. What was a strategy focused on standard, ‘non-sexy’ entities has expanded to include things as diverse as mental health and drug addiction facilities to RV dealerships and mobile homes.
“I think that’s been a benefit overall,” says Cain. “For capitalism and the ability for someone who might not have otherwise had the ability to have a liquidity event or perhaps a liquidity event that was as good as they got, because private equity is more aware and they’re more willing because of the roll-up model, to say ‘I’m going to go where I think the good companies are.’”
“The ubiquity of private equity and the awareness of private equity and their willingness to go into markets large and small, I think is a differentiating factor,” adds Cain.
Have you noticed an expansion in the verticals receiving consolidation attention? Let me know at [email protected].
–Cole Lipsky
