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What is roll-up (merger)?

Roll-up (merger)

It's often a merger of two or more smaller companies in the same industry or a related industry by an investor to make the larger company more resilient to market forces and to take advantage of economies of scale.

Where have you heard about roll-up (merger)?

As an investor you will have seen many smaller companies merge to claim a larger market share, to expand into larger geographic areas or to secure certain methods of production. It is most often seen in new markets with lots of smaller players.

What you need to know about roll-up (merger).

If a new or emerging market becomes crowded by lots of smaller companies or becomes fragmented it may make financial sense for an investor (like a hedge fund) to purchase two or more companies in the same field to consolidate the skills, products and risk. Such market consolidation is also seen in times of economic downturn.

A roll-up can also mean the merger into one partnership of many smaller limited partnerships. If an investor uses a roll-up merger to hedge risk, the return may not be as much as expected.

Find out more about roll-up (merger).

To find out more about roll-up mergers, see our definitions of mergers and acquisitions, and emerging markets.

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