Explaining holding periods and exit routes of buy-and-build strategies in private equity

This thesis aims to explain the determinants of holding periods of buy-and-build strategies and examines whether buy-and-build strategies have an impact on the route of exit. By using a sample of 150 UK-based buy-and-build cases with exits from 2007 until 2018, this study finds that longer holding periods are explained by the number of add-ons and the execution of industry diversifying add-ons. Evidence is provided that private equity firms with prior buy-and-build experience are likely to face lower holding periods in subsequent buy-and-builds. Comparing the buy-and-build cases to 290 UK-based standalone private equity cases, longer holding periods tend to be related with financial exits. However, controlling for financial performance of the portfolio company lead this result to become insignificant. Although findings indicate that buy-and-builds tend to decrease the likelihood of a public listing relative to a trade sale, the evidence is not found to be robust. Therefore, no conclusive evidence can be provided for the relationship between buy-and-build strategies and the route of exit.