A holding company owns controlling stakes in other businesses, allocates capital among them and hires the people who run them. A roll-up buys several businesses in one fragmented industry and combines them. Our view is that the most valuable acquisition strategy is a holding company, and at scale, sometimes a public one.
This guide gathers the articles on how these structures work: forming the parent company, moving an existing business under it, and deciding what belongs where. It covers how roll-ups are run, why many of them fail, which industries suit them, and how serial acquirers think about hurdle rates, return on invested capital and deal size.
The case studies draw on public records for companies such as Constellation Software, Lifco, Addtech, Judges Scientific and Teledyne, along with cautionary examples. They show what these models look like in practice and where they have gone wrong. They are general information, and what fits a given owner depends on the businesses, the capital and the people involved.
Holding company basics and structure
- How do you build a holding company for acquisitions?
Form the parent first, raise capital before the first deal, buy profit below your platform's multiple, and integrate. The four levers, with the math. - What is a holding company and what does it do?
A holding company owns controlling stakes in other companies, allocates capital and hires their leaders. For acquirers, it is one entity investors can back. - What are the pros and cons of a holding company?
Pros: higher multiples at scale, capital raised once, separate liabilities. Cons: cost, complexity, and no escape from the SBA's $5M cap or personal guarantees. - How do you set up a holding company for multiple LLCs?
Form a parent, make it the sole member of each LLC, sign intercompany agreements, keep separate bank accounts and consolidate monthly. Get lender consent first. - Should a holding company be an LLC or a C-corp?
An LLC is usually cheaper for a private holdco with a few investors. A C-corp fits institutional money, stock-paid deals, ROBS and listing. Confirm with a CPA. - How much does it cost to set up a holding company?
Forming the entity is cheap. Real costs are legal documents, tax and accounting setup and audit-ready books. Deal legal fees ran a median $28,500 in one survey. - How do you move an existing business under a new holding company?
Usually you contribute your shares or LLC interests to a new parent for its equity; S-corps often use an F reorganization. Get lender and SBA consent first. - Should a second business sit under my company, a sister LLC, or a new holding company?
One add-on can sit under your company. If you plan more deals, a holding company with each business as a subsidiary ages best. All share the SBA's $5M cap. - Is my first business a platform, or just a business?
Your business is a platform if it runs without you, has managers and clean monthly books, and is big enough to be priced on EBITDA, roughly $1M+ of earnings. - Who should be on a holding company's first board and advisory team?
Start small: you plus two or three people covering deals, finance and your lead investor. Add a lender, deal lawyer, CPA and QoE provider, required at $3M+. - How do you value a holding company? | Meraki Dealmakers
Value a holdco two ways: sum of the parts at each company's multiple, or combined EBITDA at a larger company's multiple. GF Data medians: 4.5x vs 6.5x by size.
Running a roll-up
- What is multiple arbitrage and how do roll-ups create value?
Multiple arbitrage means buying profit at a low multiple, like 4.5x EBITDA, and owning it inside a larger company the market values higher, like 6.5x or 9.0x. - How do you run a roll-up as a small business owner?
Run a roll-up in order: thesis, platform, capital, team, then a pace you can integrate. SBA Business Expansion loans need 1.15x coverage and cap at $5M. - Why do roll-ups fail? | Meraki Dealmakers
Roll-ups fail from overpaying, too much debt, weak integration and dilution. Stock-paid deals lag cash deals by 20-30 points over 3-5 years in academic data. - Which industries work for small business roll-ups?
Roll-ups work in fragmented industries with recurring revenue, licensing and a size premium. PE home-services deal count rose 150% from 2020 to 2024, per Carta. - What's the multiple difference between an add-on and a platform?
Add-ons sell at small-company multiples; platforms earn a premium. In HVAC, owner-run shops fetch 2.0-3.5x SDE while regional platforms reach 9-13x EBITDA. - How do you buy a competitor? | Meraki Dealmakers
Approach the owner directly, share data in stages, price on standalone earnings and plan integration before close. SBA expansion loans need 1.15x coverage. - Should you sell to a private equity platform or build your own?
Sell to a PE platform for mostly cash at close (IBBA: 83-92% of value across deals) or build your own to capture the platform multiple, with more risk and work. - What should you build in year one if you plan to buy more businesses?
Build monthly accrual financials, audit-ready books, a team that runs without you and a holding company. Deal two may be tested at 1.15x on historical results.
Serial acquirer models
Hurdle rates, ROIC and capital allocation
- What hurdle rate should a serial acquirer use?
No serial acquirer publishes one hurdle rate. Judges targets 30% ROTIC (17.8% in 2025); Lifco targets 50%+ ROCE ex-goodwill. Disclosed figures, worked example. - What is ROIC (or ROTIC), and why do serial acquirers obsess over it?
ROIC divides profit by invested capital. Constellation reported 38% (2015) and 29% (2017); Judges 17.8% ROTIC (2025). See how the definitions differ and why. - What multiple do serial acquirers really pay for small companies?
Disclosed deals: Judges paid 6.0x EBIT for Heath (2020), 6x plus property for Magsputter (2024); 2025 notes imply 6.9x EBITA at Lifco and 9.3x at Addtech. - Should a holdco pay a dividend, buy back stock or keep acquiring?
Acquire if deals clear your hurdle, then pay out the rest. Lifco spent SEK 3,360M net on deals vs SEK 1,090M on dividends in 2025. See the disclosed policies. - How big should each acquisition be relative to the holdco?
Disclosed deals are small: Lifco's 2025 deals averaged 0.5% of group sales, Addtech's 0.8%, Judges' Magsputter 6% of profit. With a debt worked example. - How much debt is safe for a public serial acquirer?
Lifco targets 2-3x net debt/EBITDA (1.1x in 2025); Judges ran under 1.5x with 3.0x covenants; Addtech 0.7x net debt/equity. Disclosed levels, worked cushion.
Public-record case studies
- Constellation Software: the template | Meraki Dealmakers
Constellation Software reported 2025 revenue of $11,623M with 4% organic growth and $1,683M of free cash flow. What a small holding company can copy from it. - Lifco: a controlled, decentralized compounder
Lifco's 2025 net sales were SEK 28,251M at a 22.4% EBITA margin, with 275 companies and one owner holding 68.93% of votes. Lessons for a small holdco. - Addtech: born from a spin-off | Meraki Dealmakers
Addtech listed on September 3, 2001 as a spin-off from Bergman & Beving; 2025/26 net sales were SEK 22,703M after 200+ acquisitions. What a holdco can copy. - Teledyne: stock as currency, then buybacks
Teledyne bought over 100 businesses in its first two decades, and retired about 85% of its shares for roughly $2.7B by 1984, per Fortune and SEC filings. - Judges Scientific: a tiny AIM listing that became a buy-and-build
Judges Scientific floated on AIM in January 2003 after raising £2M; 2025 revenue was £145.8M from 25 acquired businesses. What a small holdco can copy. - Teqnion: a small Swedish serial acquirer
Teqnion (First North, TEQ) reported 2025 net sales of SEK 1,800.0M, EBITA SEK 203.1M and 38 subsidiaries. Dated figures, a SEK 73M impairment and 2026 results. - Röko: a 2025 serial-acquirer IPO that raised no new money
Röko listed on Nasdaq Stockholm on March 11, 2025 at SEK 2,048 a share. All 2,580,257 shares sold were existing, so the company reported receiving no proceeds. - The 1990s roll-up IPOs | Meraki Dealmakers
Roll-up IPOs of the 1990s: a 47-firm study (1994-98), U.S. Office Products, Metals USA and IES, with Chapter 11 dates in 2001 and 2006 from SEC filings. - 1847 Holdings: a small "Berkshire" pitch under stress
1847 Holdings sold 1,428,572 shares at $4.20 on NYSE American in Aug 2022; trading was suspended April 3, 2025 and it now trades OTC. What the filings show. - Compass Diversified and Lugano: subsidiary controls
Compass Diversified restated 2022 to 2024 after its Lugano investigation. FY2024 revenue was restated from $2.20B to $1.79B, according to its SEC filings. - Alpine 4: reporting failure and delisting
Nasdaq delisted Alpine 4 (ALPP) effective May 16, 2025 under Rule 5250(c)(1) after late reports and two non-reliance notices. Dated timeline from the filings. - Converge: reverse takeover to take-private
Converge went public on the TSXV by reverse takeover on Nov 7, 2018, grew revenue to C$2.7B by 2023, and was taken private at C$6.00 a share in April 2025.
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Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This guide is general information, not legal, tax or investment advice.