Unless you are familiar with how private equity firms tend to operate, the idea of creating a platform and growing it from a business development standpoint can be new. As a result, many business owners are unaware of an interesting concept surrounding additive growth via planned, strategic acquisitions.
Older business owners are likely familiar with the Harold Geneen conglomerate roll-up strategy of the 60s and 70s. Geneen, CEO of ITT at the time, acquired hundreds of companies across dozens of industries, creating a vast business comprising many related and unrelated parts. He grew the company from a medium-sized business with $765 million sales in 1961, into a multinational conglomerate with $17 billion sales in just nine years. Under Geneen's management, ITT became an exemplary modern multinational conglomerate, growing through a series of around 350 mergers and acquisitions across 80 countries.
Whilst to some analysts this was seen as highly successful, others disagreed. For a number of reasons, this method of corporate growth fell out of favor and was replaced with a model that focused on strategic expansion via organic growth and well-planned highly targeted acquisitions.
Nowadays, private equity firms tend to focus on these highly targeted acquisitions, honing in on fragmented industries with good prospects for growth and acquiring a ‘platform’ company which is generally large and spending the next 5-7 years acquiring ‘add ons’ via well-planned acquisitions of smaller businesses. Over the years, Generational Capital Markets has helped many private equity groups in their strategic growth initiatives. As the following chart from PitchBook displays, the add-on strategy is becoming increasingly popular with equity firms:
As this chart clearly shows, since 2006, add-ons have become the best way for many equity players to grow. Equity firms are moving downstream into smaller transactions as it is easier to integrate a few smaller firms during a 5-year period and create a larger entity than to participate in a ‘mega’ transaction.
Many of the equity firms that Generational Capital Markets (part of the Generational Group) deal with, which often specialize in transactions valued below $100 million, have well-established methods. They conduct an extensive amount of research and unearth a wealth of integration opportunities, leading them to invest in industries comprised of smaller players who need their professional management to grow and thrive.
If you own a privately held company but lack capital, support and management/sales experiences to reach your goals, then partnering with a private equity firm that is building a platform can be a good option.
If you would like to learn more about the options available to you, get in touch with one of our senior business advisors today.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.