Consolidations and roll-ups
It is a well documented fact that the majority of large corporate entities trade, and are therefore valued, at a higher multiple of earnings than their smaller, more fragmented competitors.
Schultz Partners will manage consolidations or roll-ups (combining smaller businesses into one larger entity) with the assistance of investment bank and private equity partners.
Once the integration process begins the target companies should stand to benefit from cost reduction strategies, economies of scale, new technologies, improved operating systems, better access to capital, Board expertise, professional management and strategic direction.
Schultz Partners can also provide the components necessary to accomplish the consolidation including industry executives and management team members, sourcing equity funding and debt financing as well as an exit through a trade sale or an IPO.
Typically, the vendors of the target companies receive payments in two parts:
- A cash component up front.
- Shares in the consolidated company.
The shareholders in the larger company receive a double benefit:
- Cost and efficiency savings flowing through to the bottom line.
- The valuation multiple for the consolidated entity significantly higher than for a standalone business.