Glossary
Buy and build
A strategy, often backed by private equity, of acquiring a platform business and then adding further acquisitions to it to build a larger, more valuable group.
In plain English
A buy-and-build group starts with a platform, a business of sufficient scale to carry a management team and systems, and then makes a series of bolt-on acquisitions: smaller businesses that add capability, clients or geography. The group is usually sold on, as a whole, some years later.
Many of the most active buyers of agencies and marketing businesses are buy-and-build platforms. Founders selling to one are often offered a mix of cash and shares in the group, so that they share in the eventual sale.
Why it matters
Buy-and-build buyers can be attractive because they are experienced acquirers with a clear plan, and because rollover equity in a growing group can be rewarding. They also have a specific model, and founders should understand how their business fits it, what will change after completion and how the group intends to exit.
What to watch for
- Ask how many acquisitions the platform has made and how the founders of those businesses have fared.
- Understand the equity structure of the group before accepting shares in it.
- Consider how integration is handled, since the value of a buy-and-build rests on the pieces working together.
Transaction language and legal treatment depend on the agreement and the jurisdiction. Written by Motion Advisory Partners as general guidance, not legal advice.