The buy and build strategy: Successful or not? A typical PE approach

This thesis examines the relationship between performance and an upcoming serial acquisition strategy using different performance metrics. The effect of a private equity firm influencing its buyouts in a buy and build strategy has been researched. The sample consists of 61 European platform- and 49 add-on companies during the period of 2010 to 2016. A matching algorithm was created to find similar control firms for the buyouts to find out whether the strategy possibly performs better than standalone deals. No evidence was found that indicates a private equity firm does increase the performance of their buyouts during the strategy. The buyouts however, did outperform standalone deals if some conditions were met. Previous buyout experience by a private equity firm does result in higher performance than standalone deals. Lastly, evidence was found that outperformance occurs when a buy and build strategy spans over longer holding periods than the standard five-year period. Further research should look deeper into other aspects in buy and build strategies such as entry to exit value changes, to further enhance the understanding of the strategy.