Rollups, acquisitions of multiple small companies with complementary product portfolios, allow private equity firms and strategic buyers to improve capacity and capitalize on economies of scale. And in this environment, rubber product manufacturers should be ready to properly assess and, if appropriate, capitalize on rollup overtures.
Rollups are happening with greater frequency now because, among other factors, company owners are approaching retirement and looking to ensure their legacies last, but don't have succession plans. Private equity firms and strategic buyers see opportunity in this environment: companies with existing infrastructure and assets that can be optimized relatively efficiently and "rolled" into portfolio companies. Rollups in the rubber products industry allow buyers to add talent, geographic locations, expand product lines and customer bases for their platform companies, and also improve purchasing power.
In return, company owners are able to preserve what they created, take care of their employees and, of course, benefit financially from a sale. However, to put themselves in a position to capitalize on rollup offers, they must take several key steps to ensure they maximize the value of their businesses.