Expert Insights: Executing a Successful Roll-Up Strategy

Clayton Stanley, Executive VP of Corporate Development for AmeriVet Partners Management, Inc., has successfully led his team to its highest number of transactions in a year. In fact, AmeriVet is on track to close over 60 transactions this calendar year. Stanley notes leveraging a roll-up strategy and working towards multiple transactions a year is a play most of AmeriVet’s competitors are making as well. With roll-ups on the rise, Stanley shares his expert insights on best practices for executing a successful M&A roll-up strategy, as well as the tools and resources that support his record-breaking year. 

Tools and blueprints for roll-up target sourcing

AmeriVet relies primarily on three things when target sourcing:

  1. Software purpose-built for M&A — M&A software allows companies engaged in roll-up strategies to track targets and store key data through all of the stages of the pipeline. In particular, Stanley’s team uses Pipeline+ as a CRM tool to track daily activity of lead generation and to identify any bottlenecks.
  2. Buy lists — AmeriVet also purchases buy lists to support its target sourcing. 
  3. Industry insiders — Since many AmeriVet representatives have worked in the targeted industry in their “past lives,” the company has been able to harness insight and cultivate meaningful relationships with potential targets. It should go without saying, but it is often overlooked, the human element of M&A is of critical importance.  

How can acquirers highlight the value proposition for the roll-up targets?

Clearly expressing the value proposition to the target creates more deal traction. Amerivet’s value proposition for its targets focuses on two key elements:

  1. The partnership model — Part of AmeriVet’s value proposition is that it presents targets with a partnership model: the current owner will remain in place and a full rebranding does not take place.
  2. Back end support for the target — For AmeriVet, the value it can offer targets boils down to levels of support that smaller owners most likely don’t have access to. Specifically robust recruiting addresses a challenge that currently crosses the borders of all industries — the need to hire and the lack of labor.  In addition,  the support of marketing expertise helps drive business. HR and Finance supports have also been attractive to potential targets. Given all this increased support and specific business knowledge of the acquirer, the target organization readily and immediately experiences the benefits of the roll-up. 

How can practitioners ensure streamlined and accurate communication during due diligence and integration planning? 

As acquirers move past the LOI phase, it is crucial for them to ensure streamlined, accurate communication because due diligence and integration have the potential to get chaotic, and the mistakes made during this time become more costly. Stanley offers the following best practices:

  1. Assign a point person for each deal — this point person will coordinate communication between stakeholders and third parties. Additionally, this person will be responsible for keeping everything on track because “all it takes is one person to get behind and affect the whole process.” 
  2. Leverage tools that enhance communication and efficiency — look for software with features purpose-built for M&A.

What should M&A practitioners look for in a pipeline management solution – specifically when utilizing one for roll-ups? 

Stanley emphasizes two essentials in a solution when it comes to what best serves his M&A success: the ability to easily store documents and the ability to track communication. “Being able to go back and look at the communication trail on an issue is much more efficient than going through hundreds of emails…when you centralize communication, it frees up a lot of time – and with roll-ups, everyone is busy.” 

What does a successful roll-up look like?

According to Stanley, a successful roll-up hinges on two key levers: happy employees and mitigated risks or issues. When it comes to happy employees, Stanley points to a smooth close and integration. Similarly, the ability to flag and mitigate risks and potential problems ensures future success and signals a strong foundation of communication and hard work; ultimately, it also protects and supports the price that was paid for the target. 

Final Thoughts:

AmeriVet is proud of its aggressive roll-up strategy and success this year, especially considering the age of their company. Ultimately, a clear M&A objective, target value proposition, and deal management software are three components that helped drive this successful deal spree. Broadening the scope to M&A trends in general, the roll-up strategy does not seem to be losing traction any time soon.

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