Roll-ups are back now that Bernard Findley, chief executive
officer of Halitron, Inc. (OTC: HAON), is in the driver’s seat. Making its
first appearance back in the glorious nineties, the rollup, as a strategy, has
had many successes. One such success is reported in the Wharton School Entrepreneurship
Blog in an article titled ‘Why I love Rollups’ (http://dtn.fm/T9bec).
Penned by Richard Perlman, executive chairman of ExamWorks Group, Inc. (NYSE:
EXAM), it tells the story of how ExamWorks, now the global leader in the
independent medical exam (IME) industry, was built using roll-ups. IME
companies examine claimants for insurance companies and other third parties to
establish the veracity of workers’ compensation, automobile accident,
disability and general liability claims.
A 2012 story with the headline ‘Roll up for a ride rich in
risk and reward’ (http://dtn.fm/027mH) in the Financial Timestouts ‘the
Floridian entrepreneur Wayne Huizenga’ as ‘the American master of roll-ups’.
Huizenga cofounded Waste Management (NYSE: WM), Blockbuster Video and
AutoNation (NYSE: AN). Other roll-ups, such as Fone Zone, ‘created significant
shareholder value’, according to a report titled ‘Key Structuring Issues in
Industry Roll-ups’ (http://dtn.fm/D2w8d) by the law firm Deacons. Fone Zone
buys and sells used mobile phones.
A roll-up amalgamates a number of small companies into one
with the aim of achieving economies of scale. Likely targets will have many
areas where efficiencies may be engineered, such as increased purchasing power
with suppliers, a lower cost of capital when dealing with the capital markets,
spreading management costs over a larger revenue base, combining warehousing
and logistical capabilities, etc. The list goes on. Roll-ups, of course, are
part of the larger mergers and acquisitions (M&A) landscape and have always
been regarded as Wall Street’s most glamorous business.
Last year was a record year for M&A. CNBC reports
(http://dtn.fm/AlrN5) statistics from industry analysts Dealogic, which showed
‘globally, M&A activity reached a volume of $4.9 trillion, beating the
record of $4.6 trillion set in 2007.’ According to the WSJ in ‘2015 Becomes the
Biggest M&A Year Ever’ (http://dtn.fm/BEWp8), ‘the largest health-care
transaction – and second-biggest deal on record – was announced in November:
Pfizer Inc.’s roughly $160 billion merger with Allergan PLC.’ Also ‘the biggest
beverage deal, was Anheuser-Busch InBev NV’s $108 billion acquisition of
SABMiller PLC’ and ‘the largest technology acquisition in history’ was Dell
Inc.’s $67 billion deal for EMC Corp.
CEO Bernard Findley knows this side of business. He has had
over 20 years’ experience working with small to mid-size businesses, both in
devising growth strategies and in mergers and acquisitions (M&A). He has
been involved in ‘orchestrating a roll-up of 16 bankrupt, insolvent, and
distressed brands’ which were later sold. For over a decade, as founder,
partner and chief restructuring officer of 4S Management, LLC, he was
responsible for acquisitions and the strategic management of portfolio
companies.
Halitron, Inc. is an equity investment holding company with
an acquisition roll-up business model. The company targets two types of
acquisitions. First, it acquires bankrupt, distressed or insolvent companies
inexpensively and then proceeds to “roll” their assets into its infrastructure.
Second, the company acquires profitable companies, with a strategic, marketing
or operational fit, at a multiple of EBITDA ranging from two to four times.
For more information, visit www.halitroninc.com
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