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Industry Consolidations During the early to mid 1990's, Industry Consolidation's, or Roll-Up's, were a popular financing mechanism. This transaction allowed independent companies to merge into a publicly traded holding company. In essence, participating companies would become part of a new company via an Initial Public Offering (IPO). These transactions allowed participating companies to realize a number of benefits including: |
Industry Combinations An Industry Combination is designed to provide a platform in which companies competing in a fragmented industry can realize sustainable economic advantages while positioning themselves for an optional significant funding event. Unlike the Consolidation IPO's of the 1990's, companies participating in a Combination do not immediately merge. Instead, the participating companies enter into a strategic combination that will allow them to realize: |
| • Significant cash at the IPO | • Significant economies of scale/scope | |
| • Access to economies of scale/scope | • Gain a successful joint operating history | |
| • Publicly traded stock for acquisition currency | • Position for eventual IPO, Strategic Acquisition, or Third Party Sale | |
| • A liquid market for an eventual exit strategy | • Increase regional competitive advantages over the competition | |
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At this point in time it is quite difficult to pursue an Industry Consolidation via an immediate IPO. However, firms that are members of a fragmented industry may realize the same benefits by initially pursuing a unique Combination strategy developed by IPODC.. |
Structuring, or Participating in, an Industry Combination can provide your organization with a great deal of sustainable economic value. This type of transaction may be the medium of choice in today's market environment to position your company for an eventual IPO, Acquisition, MBO, and/or Third Party Sale. |
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