@article{HammerMarcotty-DehmSchweizeretal.2022,
  author    = {Hammer, Benjamin and Marcotty-Dehm, Nikolaus and Schweizer, Denis and Schwetzler, Bernhard},
  title     = {Pricing and value creation in private equity-backed buy-and-build strategies},
  journal   = {Journal of Corporate Finance},
  volume    = {77},
  number    = {December 2022},
  issn      = {1872-6313},
  doi       = {10.1016/j.jcorpfin.2022.102285},
  institution = {Chair of Financial Management},
  pages     = {102285},
  year      = {2022},
  abstract  = {We investigate the pricing and value creation in private equity-backed buy-and-build (B\&B) strategies using a sample of 3399 buyouts between 1997 and 2020 as well as proprietary performance data. We find that private equity firms pay sizable premiums for B\&B platforms. The transaction multiples are similar to those paid by strategic acquirers for matched targets. Despite paying high premiums, private equity firms generate above-average equity returns in B\&B strategies. This is because of both higher top-line growth and multiple expansion. To back up our empirical results and shed light on decision-making in B\&B strategies, we present evidence from the field. Survey results from 32 interviews with private equity managers provide novel insights into B\&B rationale, valuation practices, pricing, value creation, acquisition processes and execution.},
  language  = {en}
}