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 Times touts ‘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
Let us hear your thoughts: Halitron, Inc. Message Board
