Roll-up acquisition PE questions
Quick questions regarding roll-up acquisition strategies in PE
Let's say a sponsor acquires a new portfolio company and then uses that portfolio company to roll-up another business of a similar size.
How is that roll-up being financed on the equity side? Is the sponsor writing another check as if it's just a separate lbo? Or do they try to use cash from the portfolio company to acquire the new business?
Also, do sponsors model out and consider the IRR of potential roll-ups on a stand-alone basis, or do they just build it into the platform companies' model to see the affect it has on IRR?