Roll-Up
Private Equity glossary · Valuation, Diligence, & Value Creation
Definition
A buy-and-build strategy combining multiple smaller acquisitions into a larger platform, often capturing multiple-arbitrage value.
Roll-Up in plain English
A roll-up is a strategy where an investor buys one company as a "platform," then bolts on a bunch of smaller similar businesses to build one big one — think of buying a dozen independent dental clinics and stitching them into a national chain. The clever part is "multiple arbitrage": small companies usually sell cheaply (a low price relative to their profits), but a large combined company is worth a richer price for that same dollar of profit, so simply combining them creates value. On top of that, the bigger group can cut duplicate costs and negotiate better deals. The whole point is that the finished business is worth far more than the sum of the pieces you paid for.
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