| Spread overhead, consolidate the back offices, create other synergies, and renegotiate with suppliers. | If you buy your competitors, they cease to be your competitors. Dominate by buying up market share, then control prices. | Moving into tangential markets allows your sales team to cross- sell and upsell to your customers and the target’s customers. | Owning multiple layers of the product delivery cycle can create value at multiple stages. For example, by acquiring a supplier, distributor, or reseller. | Setting up a legal entity and cutting through red tape is a pain with unique frustrations depending on the geography. Sometimes buying is faster and less risky. | Often called “acqui-hire”, the employee skillsets are the asset and the revenue they generate is not the driver. Most common for software and other tech skills. | This strategy prioritizes the asset’s potential over the target company’s revenue or talent. Examples include customer lists and intellectual property. | After a “build or buy” analysis, you may decide it makes more sense to buy than build, for example if time is critical or you don’t have the team to build a strategic new product. | Rolling up smaller companies in a fragmented industry into a large company allows the larger firm to combine revenue and earnings and hence increase the valuation multiple. |
