Private equity roll-ups assume merging similar companies creates automatic synergies and market dominance. But each portfolio company usually succeeds by serving different customers and niches, so consolidation often fails to deliver the promised 2 + 2 = 5 math.
Yeah, that spreadsheet math is so true. And I work with a couple of clients that are part of private equity, you know, sort of holding portfolio companies that the portfolio, you know, private equity group thought, oh, we're going to, you know, if I just bring together 5 companies that do the same thing, we'll then dominate the marketplace. But it's really not true because each of them was finding success serving different customers, addressing different niches, providing different types of services, you can't just smush them all together and get, you know, something that's necessarily 2 2 5.
How Can You Maximize Your Business Value Before Selling? with Randy Katz Video
