Buy-and-build deals have surged in popularity, now representing nearly half of all transactions. But as M&A conditions gradually improve, the question isn’t just about getting in the door—it’s about getting it right. What makes or breaks these deals?
A buy-and-build strategy can quickly shift from value creation to value erosion. Post-merger integration is often where the real value emerges—or unravels. While it’s tempting to view synergies solely from an administrative angle, like consolidating support functions, that’s just one layer. The actual dealmaker lies in creating operational synergies that enhance long-term resilience.
In addition to the -relatively obvious- cost optimisation scenarios, key questions matter: → Is the customer base complementary?
→ Can the acquisition diversify offerings or markets?
→ How do we prevent friction when integrating teams?
→ Are there any service inconsistencies that could erode trust?
→ What refinements in our operating model do we need to implement to secure the value promise?
Every element should not only fit, but also expand the company’s strategic reach. Consider the power of small and mid-sized acquisitions. When integrated thoughtfully, these can open doors to new markets, increase customer density, or even provide geographic reach, all while maintaining lean operations. But that value depends on uniform systems and aligned processes—a rock-solid platform. Companies that fail to establish this end up juggling a fractured ecosystem, losing value in siloed operations and struggling to realise synergies.
There’s a pressing focus on “business health” over sheer expansion. Companies are pressured to scrutinise every cost line to protect margins in response to flat revenues and price declines. Fragmented industries may seem promising, but without a foundation that supports consistent earnings, elongated holding periods, and growing complexity, even a solid industry can lead to capital impairment.