What is role-up strategy? Management method to acquire and grow a small company

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Role-up strategy

Strategy to acquire and grow small businesses in the same industry

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In recent years, it has been attracting attention in the industry that is widely distributed by small and medium-sized companies such as IT, medical, construction, nursery and nursing care.

In the investor’s perspective, it is easy to expand sales and profits in a short time, but it is also necessary to pay attention to acquisition failure, debt increase, and integrated risk.

In this article, we will explain the mechanisms of roll-up strategies, benefits and risks, and the points to be seen in corporate analysis for beginners.

What is role-up strategy?

Role-up strategy is a growth method that utilizes M&A.

to say

Create a large corporate group by gathering small companies

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。 you’re a small company or a small company, you’ll be able to expand your sales scale, customer base, regional development, talent, and brand power at once.

Why role-up strategy is held

The purpose is to gain profit of scale.

For example, if you group multiple companies, you can expect the following effects:

• Unify purchases and reduce costs
• Sharing accounting and HR systems
• Share sales know-how
• Improve recruitment efficiency
• Collect Ads
• Consolidate management departments

In other words, it is a strategy that creates efficiency that was not understood by itself by consolidating a company that existed in rosebara.

Image example

For example, we think that there is a small company for each region.

If you acquire and group these, you can:

Small company alone makes it easy to realize nationwide expansion and large-scale orders by grouping.

Why investor is popular

The growth rate is only when the roll-up strategy is attracting investors.

In regular corporate growth, it takes time to open new stores, develop new products, and acquire new customers.

roll up

Increase sales and customer base at once by acquisition

There is a characteristic.

As a result, in a short period of time, the sales scale will be increased, and it will be easier to evaluate as a "growth company" from the stock market.

The most commonly used industry

The role-up strategy is used in small and medium-sized enterprises.

Especially in Japan, the lack of successors for small and medium enterprises has become a major issue, so the interest in the roll-up strategy is growing.

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1. Easy to grow

With M&A, you can expand your sales scale at once.

It may be possible to realize a scale that takes several years only by self-development.

2. Synergy effect can be expected

About Synergy

The integration creates additional benefits

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For example, cost reduction due to unification of stocking, sharing of sales network, and consolidating management departments.

3. Easy to expand market share

The presence of companies in the same industry increases.

If the share becomes bigger, the price力 and recruitment force are also strong.

Demerit and Risk

1. Less debt

Funds are required for acquisition.

We may raise funds with borrowings and corporate bonds if the funds are not enough only by hand.

As a result,財務abilities may increase and financial burden may increase in interest rates.

2. Integration may fail

It is not easy to summarize the acquired company.

• Different corporate culture
• Different systems
• Human Resources Leave
• The quality of customer service drops
• No management

If such a problem occurs, the profit after the acquisition may not increase as expected.

3. Growing slows when the acquisition destination disappears

Role-up strategy is a strategy that is easy to grow by continuing to acquire.

However, growth becomes dull when a good acquisition destination decreases or the acquisition price rises.

The market also evaluates the stock price with the following acquisitions, so if the growth is dull, the stock price may be adjusted greatly.

Points to be considered to investors

1. Operating income

Check whether the operating profit is improved as well as sales.

Even if sales increase by acquisition, if the profit rate is lower, it may not be integrated.

2. Debt Ratio

Check whether the debt dependency is too strong.

It is important to see net interest-bearing debts, ity ratios and operating cash flows in companies that continue to acquire.

3. Profit growth after acquisition

The amount of acquisition is likely to increase sales.

However, it is important

Is profit and cash increased after acquisition?

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Please note that if you are not profit or cash, you will only increase sales.

The role-up strategy is to show and grow

Note that beginners should not only judge sales growth.

If you continue to acquire it, you will see your sales.

However, the following conditions are dangerous.

• Less profit
• High debt
• Large
• missing cache
• The cost of integration

“Noren” is especially important.

If the acquisition price is too high, it can lead to future loss risk.

Long-term investment

If you’re looking at a roll-up company for a long time, there are three important things:

M&A does not succeed.

A successful company has successfully integrated systems, human resources, sales and management systems after acquisition and gained profit.

• Role-up strategy using M&A
• rate Small Businesses to Increase Groups
• Quick growth if successful
• However, there is a risk of loss, loss, or loss of debt
• Investors should see profits, abilities and cash, not sales

First,

1. Do not judge sales growth alone
2. See debt status
3. Check profit growth after acquisition

By focusing on these three things, it is easy to analyze roll-up companies.