Buy and build: the best growth catalyst for the mid-market?

Is the buy and build the best growth catalyst for the mid-market?

There are many paths to business growth but buy and build - where a company or investor seeks to grow the overall value of their business or investment through a series of additional acquisitions – is a particularly popular choice. Why? While organic growth can be slow and unpredictable, a buy and build strategy offers a faster, more strategic route to scale.

Building from solid foundations

A company adopting a buy and build strategy acquires a series of smaller companies to enhance the value of a central ‘platform’ business. The existing company provides solid foundations – proven leadership, systems, and support infrastructure – to which other businesses can be added and developed.

Over time, the aim is to create a stronger, more diverse and higher-value group, where the combined entity is worth more than the sum of its parts.

A growing advantage

There are numerous reasons why businesses pursue buy and build strategies:

• Accelerated growth: For companies facing a high level of competition for new customers, opportunities to grow organically at scale are scarce. Growth that might take years to achieve organically can often be realised much faster through acquisition.
• Market expansion: Acquiring companies in new geographies or sectors gives businesses immediate access to markets that would otherwise require significant time and investment to enter.
• Product diversification: Buying companies with complementary product ranges or services can broaden offerings and strengthen market positioning.
• New capabilities: Businesses can quickly acquire new skills or digital capabilities rather than building them from scratch.
• Operational synergies: Shared support functions and greater purchasing power can significantly improve margins.
• Improved valuation: A well-executed buy and build strategy often results in higher earnings multiples and increased investor interest.
• Attracting investment: Buy and build strategies are particularly appealing to private equity buyers because of their relatively short investment horizon. Certain buy and build gains can be monetised almost immediately while the same results typically take much longer organically.

Mid-market ideal for buy and build

Mid-market companies are particularly well-suited to buy and build strategies. They are agile enough to integrate smaller businesses effectively but big enough to manage the operational and financial complexities involved. The strategy works especially well in fragmented sectors, where there are many potential acquisition targets – such as business services, IT, or professional services.

Careful execution is key

While the benefits are compelling, buy and build also has its challenges. Integration must be handled with care. The best outcomes stem from a strong strategic fit, cultural alignment, and experienced management who understand both acquisition and change.

Finding the right funding partner

Financing is another critical component. Most businesses cannot fund acquisitions purely from cash reserves. Debt finance can unlock powerful equity returns and preserve working capital, but it needs to be structured correctly and delivered at the right time, pace and scale for the business needs.

Lenders like ThinCats support buy and build strategies by delivering tailored transitional capital solutions for mid-sized firms. From structuring the deal to providing certainty in competitive bidding situations, a good funding partner that works closely with your business can be an important building block for success.