Author: Andre Achtermeier

What does Buy & Build actually mean? What requirements do I need to meet as an entrepreneur? At what points does it bring me forward and at what points is such a concept a big risk for me and my company. These are the questions I will try to answer today.

What is a buy and build concept?

Buy & Build means that a company (in our case our/your own company) serves as a growth platform. We are now building a group of companies on this platform. We buy companies as part of M&A buy side transactions. Ideally, always 100% of the business. This is our building material. This material is now being built with our own existing company. Construction is not complete until the purchased asset is seamlessly merged with the platform and functions as one entity.

What are the advantages of buy and build?

The advantages are obvious. The existing business can transition from organic growth to hyper growth. Through Buy & Build, an company can grow extremely fast. The growth of the company is sustainable because existing market players are bought in. As a result, the value of the company increases quickly and reliably. Organic growth flanks this concept and creates further substance.

What requirements do I need for such a concept?

First of all, every entrepreneur must look into the possibilities of such a strategy and clarify for himself whether he wants to grow up quickly. A Buy & Build concept requires clear corporate structures and processes. Many new employees join the company very quickly. The company must be able to deal with this. It must be prepared that purchased companies must also be integrated. Buying is easy, integrating brings cash flow.

What are the risks of a buy and build concept?

M&A transactions are cost-intensive. The company needs professional advice and support. Lawyers, tax advisors, M&A consultants cost money. The transaction is mostly financed. The risk of default is latent. The concept and each transaction must be well planned. Once a target is bought, the target’s employees should stay on board. Nothing is worse than having paid money for a thought construct or machines that no one operates. The same applies to the customers. They should not change partners because of the acquisition.

A good Buy & Build concept needs a precise preparation. Here, eightM offers different levels of service readiness. From the first readiness check to the provision of an M&A team, which acts as an external M&A department of the client. Contact us. We will show you how to realize hyper growth.

The M&A market is growing strongly at the moment. Never before have there been so many transactions as last year. In parallel, there is an ever-increasing number of tech companies in the US.

From software to hardware development. The industry is booming. However, most companies do not start directly as a new Facebook or Apple. They start small. With an idea and a small team. Equipped with little capital, they develop their dream. Their solution.

Really ready for the next stage?

But what happens when the product is ready for the market? Then the next stage must be ignited. The young StartUp has to grow up quickly. It has to transform itself. Rebuild and possibly reinvent itself in its structures.

Staffing plans are made. Cash flow is forecast and operational structures are created. Sales. Marketing. Partnerships. Most companies at this stage of life are thinking about organic growth. Hardly any entrepreneurs have M&A on their radar at this size of company. Why should they. The young company is still too small. Not enough money is flowing yet. The exit is far away.

Abbreviation to growth

But what if the exit and growth can be accelerated? M&A is not only the sale of the company. M&A is not just the golden exit. M&A is more. M&A must be as much a part of corporate strategy as liquidity planning. Buying other complementary companies is a strategic decision that every company should think about in the early stages of their business. Finding software developers is difficult. The market is limited. Hiring external companies to do core development of your own product is risky. Building structures takes a long time.

Why not build a group of companies and merge them into one entity? Why not acquire and integrate a strong distribution company? Why not acquire a custom development company and leverage its resources? It sounds simple, but it is the supreme discipline of entrepreneurship. Structures must be in place that are otherwise only found in large corporations.

Integration is the art

Buying is easy. Finding the right companies whose owners are then willing to sell is difficult. Then integrating the company in such a way that you get the greatest possible benefit and don’t scare away any of the target’s employees. That is the fine art.

The big tech companies have long understood this. The small ones need to keep up. They need their own buy & build strategy. Professionally accompanied. Grow your enterprise value.