Tips To Execute A Successful Industrial Roll-Up

October 23, 2021

Acquiring several companies in the same or complementary industries is easier than making them work together harmoniously to create a business capable of achieving above-market organic growth.  We’ve identified a host of better and best practices that we believe will deliver your greatest chance at success.  These include:

  • Hire (or at least identify) your platform management team prior to your first acquisition
  • Have that team identify specific KPIs – key performance indicators – that you will use to measure performance at each acquired company, and use those metrics as part of your due diligence / underwriting process to compare competing acquisition opportunities.
  • Share your underwritten synergy plans with site level leadership and incorporate those objectives into their bonus targets.
  • Determine which functions will reside at corporate, and which will reside at each site you acquire. Where site-level employees will continue to report to site leadership (in, for example, customer services, sourcing and other functions that were managed at the site), create reports so that corporate leadership can have visibility into site level performance.
  • Identify the ERP system you will implement and engage an external implementation team to migrate the new company to your chosen system within 60 days of closing. The localized management team you inherit will struggle to implement and use a foreign system as they (i) get used to the new environment and (ii) continue to perform their regular duties.  Hire temporary help to ensure success.  If the localized accounting is unable or unwilling to embrace the new ERP system, you’ll need to make personnel changes.
  • Ensure that prior to acquiring each company, that you have a clearly delineated operations strategy with an action plan, budget and milestones and identify and hold people accountable to that plan. It’s not enough to add another competency or location to your platform without ensuring that you have the internal people and processes to seamlessly incorporate that business into your service offering.
  • Update your sales and marketing materials and messaging ahead of each acquisition (even if it will be changed later) so that the new company appreciate its importance to the combined enterprise and your sales team can be driving sales to the new location. Nothing makes a localized management team more excited and loyal than witnessing revenue growth under new ownership.