Roll-up
An acquisition strategy that combines multiple businesses, often in a fragmented industry, into a larger group. Its results depend on purchase prices, business performance, financing, and integration.
Roll-up in round numbers
Hypothetical: a platform buys smaller companies at 5x annual earnings before interest, taxes, depreciation and amortization (EBITDA) and models an exit at 8x. The exit multiple is an assumption, not a guaranteed market value. The blended acquisition multiple is total acquisition enterprise value divided by total comparable annual EBITDA, using a consistent earnings basis. It is weighted by acquired earnings, not an arithmetic average of the quoted multiples.
Shayne Fitz-Coy’s definition of Roll-up
The math works by averaging down. You buy a flagship company at ten times earnings, then buy small ones at three, four and five times until the blended entry price sits near the small numbers.
It only works in a fragmented industry with many small sellers. Where those small companies do not exist, the arithmetic never starts.
Terms Related to Roll-up
Serial acquirer · Bolt-on acquisition · Platform company · Multiple arbitrage · Buy-and-build · All of the glossary