Week 13 Reading Reflection

In this reading it was really interesting reading about the "roll up" technique. The book's definition about rollups is a technique used by investors to acquire and merge multiple small companies in the same market. I don't fully understand how this is possible. When the author mentions "merge in the same market" does he mean that the small companies create products/services that apply to the same customer range? Does it mean all companies address the same customer need differently? Do different small companies cooperate to create a product or nothing of the above? If companies cooperate to create a product then rollups are cost effective; companies save up money by sharing expenses and profit. On the one hand, combining companies can be a good thing because if the right match is done then more attention is given to the potential product and more consideration is taken for the customers' need. Therefore, the result is worth investing in and all companies get profit from it. On the other hand, competition is sometimes a major issue. Companies compare each other and instead of wanting to cooperate they want to get better than their competitors. Thus, they get distracted of to whom and when is the best time to sell their products As the author says they get distracted as to "who is buying whom?". Does the investor emerge with the smaller company or the reverse? Lastly, a lot of experienced entrepreneurs exit their venture and sell their companies through rollups. As a result, the employees may not be satisfied with the fact that they have to work with a company they don't really want to. The lesson from all this is, ALWAYS know what your strategy is, especially when rollups appear in your industry. Decide between a growth strategy, an exit strategy or an investment strategy. What type of relationship will you have with your combined company? That's the best way to understand the potential outcome that is best for you and your company.