CD: How does Buy and Build best fit into the wider market right now?

NV: The mid-market works best due to increasing interest rates and downward pressure on asset prices. This resulted in a notable increase in deal-making activities throughout the year. We’ve seen active opportunities in sectors such as North American telecommunications, which is receiving substantial governmental grant support and remains relatively unconsolidated, offering potential for growth. Additionally, the renewable sector presents lucrative M&A opportunities through client and asset acquisitions via Buy&Build strategies.

CD: What should the sector be considering for future success - pros and cons?

NV: Building a Buy & Build Platform is a considerable task for the asset management team, necessitating a supportive framework, experienced personnel, and appropriate resources for successful development and expansion. Thus, it's essential to plan for the time, effort, and expense involved, including the cost of experienced operating partners and senior board members, as well as the demand on internal resources to support platform creation. 

The process of creating the platform involves setting up various systems, processes, and governance protocols. This could potentially divert management and asset management teams from their primary roles. As such, it's important to ensure adequate planning and allocation of resources to maintain focus on core functions while setting up the platform.

CD: What do you think makes this a worthwhile bid?

NV: In today's competitive business landscape, the proposed strategy brings a wealth of benefits. My main points would be:

1. enables capitalisation on market opportunities and offers the potential for competitive acquisition pricing, thus providing an edge over competitors. 
2. It opens avenues to build and deploy best-in-class solutions, systems, and processes, which can significantly enhance business efficiency and effectiveness
3. The platform will infuse agility, flexibility, and superior adaptability in operations, essential elements for sustaining in a dynamic business environment. 
4. With an efficient core management team, this strategy ensures the implementation of suitable market-facing strategies, rigorous operational controls, and strict financial management, all of which are integral to ensuring long-term business success and profitability.

CD: And what are the major pitfalls people need to consider?

NV: It is actually a lot to do with people and systems.

1. Cultural integration is essential, particularly if the acquired entity brings along its employees. Communication is essential to help all parties understand the context, objectives, and journey. Regular updates on concrete actions and status can facilitate this process.
2. There is often an underestimation of the complexity involved in system integration, technology roadmap definition, and harmonization of a diverse technology landscape, and how disruptive it can be to the operation. One way we have worked at alleviating this was to ensure the portfolio company hires a 3rd party firm to support the integration and dedicate a small subset of resource in the organisation to coordinate the effort.
3. Introducing new processes and determining the value each process from the acquired and acquiring companies brings can be challenging. In the mid-market space, it's vital to assess which processes should be retained for efficiency and culture cohesion, thus fostering a sense of belonging within the newly formed entity.
4. The transition can create significant operational stress on the organization. Therefore, dedicating a team to the buy-and-build strategy can often facilitate a smoother transition
5. Purchasing at the correct multiple is crucial, so due diligence and accurate market assessment for growth potential, including a thorough competitor landscape analysis, are key considerations.