Buying for the Sake of Building? A Qualitative Study on Buy-and-Build Strategies in the Nordic Private Equity Market

Sammanfattning: We examine how buy-and-build strategies are executed in the Nordic private equity market. Particularly, we analyze the role of buy-and-build in creating value, key elements contributing to a successful strategy, and how the quality of the implementation is reflected in exit considerations. Using a case study of Ratos' buy-and-build implementation in its platform company, HL Display, we attain in-depth understanding of these issues in a real-world context. For a more exhaustive comprehension of the Nordic market, we also conduct interviews with a broad sample of prominent private equity players. Increased competition in the private equity market has intensified the need for operational enhancements to achieve satisfactory returns. To cope with this, we find that buy-and-build plays an important role as it unlocks new value creation potential. Furthermore, we find that a strong market position, a capable management team, and clear processes are critical factors contributing to the success of the strategy. However, findings suggest that the implementation approach needs to be adapted to each individual case. Finally, we find that add-on acquisitions must be rooted in industrial logic for multiple arbitrages to be justified, a requirement more pronounced today than only a few years ago. Companies can no longer solely rely on acquisition-driven performance as investors incorporate organic improvements in their evaluations.