Anyone experienced with "up-side" only rollup's?

October 06, 2025

by a searcher from Washington State University in San Diego, CA, USA

I recently watched a podcast with a plumber explaining that he joined a coalition group with 10 other businesses, to continue operating independently under their original name while combining 2-3 systems (payroll, HR, annual masterminds together)- and then all sell together in the end for a higher multiple. He mentioned the individual heading this " up side only synthetic roll up" valued their business at a specific multiple on EBITDA, and then whatever they get above that multiple they split. All done without acquiring with cash. I currently own a pest control company that does $4.4M in annual recurring subscriptions, and have gotten one other small pest control owner to join this concept. Is this a real roll up option? Has anyone done this or can point me in the right direction? Would love to hear thoughts or experiences in this.

Reply by a searcher
from Stanford University in Healdsburg, CA 95448, USA

I suppose it could work if you can find efficiencies in centralizing and sharing costs of admin, etc., but that's kind of obvious. The only other concept would be to consolidate to a level where the scale has market share advantages and would be more valuable because of that, or there's a diversification of customer base (or some similar dynamic) that reduces risk to the larger enterprise. Outside those scenarios, I can't think of justifications to increase a multiple. I've worked a number of transactions with roll-up or portfolio brand structures and on exit we generally realized far more money selling individual brands/businesses to strategics or funds that were looking to augment an existing investment thesis than we would have by selling the entire enterprise intact.

Reply by a searcher
from Azusa Pacific University in Irvine, CA, USA

Nathan, interesting concept. Have seen this done a few ways. Ultimately the lever you are trying to solve for is what do you split and how do you split it. Unfortunately, the upside case sounds great on the front end, but ultimately comes down to relative value of what that person thinks is fair. It also begs the question of having everyone as a part of the group to say what are you going to share because you want to be transparent enough to have everyone join the group, but in that case, there needs to be a rock solid foundation on what justifies what each owner gets of the upside. Happy to chat through it live if you'd like.

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