Consolidation strategy

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June 20, 2020

by a searcher from Millersville University of Pennsylvania in Lancaster, PA, USA

I'm the Founder and Managing Director of DSC Solutions, a multi-state facility services company. We are currently under an exclusive LOI to acquire a competitor doing $7M per year in revenue for just over $1M. The company has the potential to produce an EBITA of at least $1M after our operational and administrative improvements. We've identified several other potential targets under similar circumstances.

The industry is very fragmented, presenting a very good opportunity to consolidate smaller firms and undergo an exit at a higher multiple of EBITA. Has anyone pursued a similar strategy? Any advise?

Thanks!

Alan

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Reply by a searcher
from Bentley University in Boston, MA, USA
Lots of value can be found in a 'shared services' strategy as you add companies to the portfolio. Functions like Accounting, Customer Service, HR, IT, Procurement, etc. The depth of value is in lowering and separting indirect expenses from direct related to operating the facility. We have worked across several projects with overall savings greater than 8 figures and improved overall efficiency (metrics like time to close books, improved customer satisfaction surveys, streamlining on onboarding, faster IT ticket resolution, etc.
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Reply by a professional
from Missouri State University in Chicago, IL, USA
Alan, we work with a number of companies that are looking at similar roll up strategies. Would be happy to discuss live. You can contact me directly at redacted
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