How to Buy in order to Build: Buy-and-build Strategy Value Drivers in the UK

Using conditions that increasethe occurrence of buy-and-build strategies, this paper aims to shed light on the performance drivers of these strategiesin terms of the change in operating performance between acquisition and exitusinga sample of 392 buy and build strategies in the United Kingdom.By means of Probit, duration, and Heckman models, this study tries toaccount for the bias that successful strategies are more likely to exit andthatwe only observe the performance of exited strategies This study finds that market fragmentation and valuationare positively related to strategy performance while the interest rate, the exchange rate and the strategy size are negatively related to strategy performance.These results support the idea that the conditions not onlymatter for the likelihood of the occurrence of a buy-and-build strategy but also to its potential performanceas buy-and-build strategies perform the best in terms of improving operating performance under favourable company, industry and financing conditions.