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Industry Roll-Up Projects Industry Roll-Ups are where an industry’s many players are consolidated into smaller groups for economic benefits. Recessions, new government regulations, or other aspects of the industry may be affecting profits and thus provide incentives to consolidate the industry. A principal reason for an industry roll-up is to achieve economies of scale in purchasing, marketing, information systems, logistics, distribution, and top management. Consolidated businesses also have less risk from the impact of an unsatisfied customer and have the reward of being able to recruit or keep key employees. The roll-up may be initiated by investors who are seeking investment opportunities, or by a larger company in the industry. To help fund an industry roll-up, The Project Corporation has the ability to develop a funding program backed by major financial institutions. This allows an individual business, or an investment group, the capital to target acquisitions. Funders are willing to provide the capital because they recognize that combining the individual businesses provides a greater total business value than if each individual business value were added together. This synergistic value reduces the risk of funding the individual acquisition. To consider an industry roll-up:
1. Define an industry that has many fragmented
players and would benefit by consolidating. Once this new larger company has been streamlined and has a track record of performance, it can now go public with an IPO, or sell to a larger company. Either strategy should reap large rewards for the investment group who invested time and money in performing the roll-up.
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