Buy and Build in the Silverfleet portfolio

Within a competitive private equity landscape with rising multiples, “buy and build” strategies have become an increasingly popular way for GPs to create value. We have seen this both in Europe, where the volume of add-ons has increased every year since 2012 and globally, where c.30% of all add-ons are part of a broader buy and build strategy.

Buy and build is a vital part of Silverfleet’s strategy and we pioneered this form of value creation, having completed 80 add-ons internationally in the past 15 years.

Our approach to buy and build starts in our origination process. When we look at a sector, one of the first questions we ask is how fragmented the sector is and what can be done in terms of buy and build. We aim to understand who the key players in the industry are and what the real synergies would be if we drive consolidation. We continue to refine our thinking on potential acquisitions throughout the due diligence stages of a transaction, and then into the formulation of our portfolio companies’ value creation plans.

Add-ons for our portfolio companies have been a very important factor in creating scale, operating synergy, and geographic expansion. Technology is also a key component; some of the best add-ons bring new technology into our businesses and this drives value. Below are some examples of recent add-on acquisitions in our current portfolio:

Scale: Most recently, Silverfleet backed the merger of Microgen and Touchstone to create a leading technology provider to the Trust and Corporate Services market. This transformational merger will deliver the global coverage, scale and innovation to meet the requirements of a rapidly evolving market.

Operating synergy: Since acquiring the UK’s leading fertility group, CARE fertility, Silverfleet has supported the team in carrying out two further add-ons of its Tamworth and Chester clinics to consolidate a highly fragmented market, benefit from operational synergies, and broaden the clinic network across the UK.

Geographic expansion: Expanding product lines and geographical coverage is another key motivation for acquisitions. 7days is a specialist workwear supplier to the healthcare sector based in Germany. They entered the Nordic market via the acquisition of Praxis, which supplies the same end markets in the Nordic region.

Technology: Lifetime, a leading provider of apprenticeship training in the UK, acquired the software provider EPA Pro. EPA Pro is used by assessors to track and record end point assessment activity. This acquisition has enabled Lifetime to rapidly scale its own delivery as well as licence out to other assessment providers.

We have been analysing and publishing data on European buy and build for over 20 years, looking at the activity undertaken by PE-backed companies; for the latest Buy & Build report, click here.