What is the primary goal of a Buy and Build LBO strategy?

The primary goal of a Buy and Build LBO (leveraged buyout) strategy is indeed to create value through strategic alignment and synergies. In this approach, a private equity firm acquires a platform company and subsequently identifies and acquires additional target companies within the same industry. The idea is to leverage the existing company's strengths, market position, and resources to facilitate the integration of these additional companies.

By strategically aligning these acquisitions, the firm aims to unlock operational synergies that can enhance overall efficiency, widen the customer base, and potentially increase market share. This strategy often emphasizes enhancing the combined operational performance, unlocking new revenue streams, and achieving cost savings through shared resources and best practices across the acquired entities.

The focus on operational efficiencies through downsizing, investing in distressed assets, or eliminating debt from operational budgets does not align with the core objectives of a Buy and Build strategy, which prioritizes growth and value creation through strategic expansion and integration rather than cost-cutting or focusing solely on distressed investment opportunities.