• patents
• buy&build strategy
• lbo
• private equity

Serial (Buy&Build) acquisition strategies account for around a third of largest and more active Private Equity (PE) transactions in Europe in the last fifteen years. B&B operations are generally structured as follows: a PE fund buys a platform target firm that subsequently performs serial acquisitions in order to achieve higher market power, synergies and integration. The PE market is rapidly moving to a maturity stage and funds more and more act like industrial and strategical rather than financial players in order to pursue efficiencies, economies of scale and keep high returns on their investments. In the present work, I focus on the potential added-value this emerging strategy can deliver, both in short and long term, aiming at finding evidence of the actual value creation of this strategy compared to typical PE Leverage-Buy-Out (LBO) deals and operations. Serial acquisitions strategy, indeed, could be meant as a second-best investment option, since the 'usual' LBO investments could seem less attractive due to more competitive PE market, or, alternatively, as just a different investment solution, characterized by longer duration, higher risk and complexity but also higher returns.
Using matched-sample difference-in-differences estimations in a sample of serial PE acquisitions in the European market, I find that B\&B strategy achieve a lower return in the short term, creating, however, the conditions to unleash higher potential in the long period, as supported by the increasing number of patents applications submitted by platform target, following a serial acquisition strategy implementation. These findings, together with higher cash-out value associated to B&B strategy, suggest that PE industry has found a different, riskier and more long-term way of value creation by acting similarly to strategic buyers, that could be used also with a view to portfolio management and diversification.