Sources of Value Creation Through Private Equity-Backed Mergers and Acquisitions: The Case of Buy-and-Build Strategies

摘要: This article documents a new value creation function of private equity investors who carry out buy-and-build strategies. Buy-and-build strategies constitute an initial acquisition of firm, serving as “platform”, by investor and follow-on private equity-backed acquisitions (“add-ons”). The merges the platform add-ons into single entity. Additionally to selection well performing firms investors prior transaction, we identify value-enhancing potentials which investors explore through buy-and-builds. bring together platforms with lower capacity utilization lower returns, add-ons higher returns in order allocate resources capacity more efficiently improve firms’ performance. However, only have positive impact on the profitability increasing industry adjusted utilization. Consequently more efficient deployment assets for generation sales drives improved performance after