What is a Buy and Build Strategy for Entrepreneurs

I’m often asked about a buy and build strategy for entrepreneurs as an alternative business growth strategy. When I mention the buy and build strategy, the question is always the same; what is a buy and build strategy? A ‘buy and build’ strategy is used by companies that acquire a number of complementary or similar businesses with the intention to grow faster or make more profit.

In other words, instead of building a number of individual businesses from scratch, companies who complement the owners original business are bought in order to scale the business quicker. Buy and Build Strategy for Entrepreneurs

Many businesses backed by Caban Investments have successfully implemented buy-and-build strategies. This strategy can be an effective way to quickly increase the size and profitability of your company, making the newly formed business stronger and more appealing to potential buyers.

The buy and build strategy is used when a company wants to expand its operations by acquiring a platform company with developed expertise, which it can then build out.

When it comes to business growth and expansion, there are several options to consider. The company can build internal capabilities that will drive the expansion, or it can buy a company that already has expertise in that area of specialisation and expand it further.

The latter option is used in the buy and build strategy. Because the operations of several smaller firms combine to add value to the new firm, the effect can create significant value. However, the combination’s success is heavily dependent on the platform company, which may result in value destruction if the strategy is not properly executed.

However, for the strategy to be successful, it must be executed correctly – there are numerous pitfalls to avoid.

Defining Buy and Build Strategy for Entrepreneurs?

‘Buy and build’ is an investment term that refers to purchasing a target company and then making a series of add-on acquisitions to create a larger, combined business. It is essentially a merger and acquisition (M&A) strategy that aims to bring together a number of similar or complementary businesses in order to increase their overall value.

The rationale for combining these companies is to create synergies, quickly expand, and improve profitability for the platform business. Typically, build and build strategies aim to acquire a number of businesses – for example, four or more – rather than just one or two.

When executed properly, a buy-and-build strategy can allow a company to grow much faster than it would otherwise grow if it grew organically, that is, without acquisitions. This approach can be useful in industries where acquiring new customers is difficult or expensive, for example.

Buy and Build Strategy for Entrepreneurs

The Advantages of the Buy-and-Build Strategy for entrepreneurs

  1. Almost instantaneous added value. When compared to organic growth strategies, buy and build can quickly add value to a business. This is possible if the combined company can command a higher multiple than the component companies – in other words, if it is worth more than the sum of its parts.
  2. Rapid expansion. By purchasing a group of companies, your company can expand into new regions, sectors, and product lines, as well as increase its customer base and headcount faster than it could otherwise.
  3. Profit margins will increase. Businesses that consolidate can benefit from economies of scale and lower costs, for example, by eliminating overlapping functions such as multiple finance teams. Larger businesses are also perceived as more stable, with a stronger market position, which has many positive consequences for profitability.
  4. Greater rates of return. If an exit is desired, a successful buy-and-build strategy can raise the company’s profile and attract the attention of potential buyers.

Important factors to consider when deciding on a buy-and-build strategy for entrepreneurs

While they can provide numerous benefits, buy-and-build strategies should be carefully considered before pursuing them. They are widely regarded as a potent tool, but only when used correctly. Consider the following issues in order to succeed:

Considerations for management
The original company’s and newly acquired business’s management will need to collaborate to create synergies that benefit the overall business. The success of a buy-and-build strategy is dependent on a strong, high-performing management team. If there is a clash of management styles among the acquired companies, the strategy may fail.

Business owners’ motivations
There are numerous reasons why a business owner might consider selling their company as part of a buy-and-build strategy. It could be to work in a more senior role in a larger organisation, or as part of a planned exit. In either case, you should try to understand the motivations of business owners to make the process go as smoothly as possible.

Horizontal integration vs. vertical integration
Many buy-and-build strategies involve acquiring companies that operate at the same level of the value chain, resulting in horizontal integration. However, this is not the only option. Acquiring a company with upstream or downstream activities can have a significant impact on the business’s value and performance.

Is your industry a good candidate for buy and build? When weighing the feasibility of a buy-and-build strategy, two key factors to consider are entry barriers and the potential for disruption.

Caban Investments’ track record of supporting these strategies
Caban Investments provides business funding and corporate finance services to our clients for a variety of reasons. One of the most common is financing acquisitions.

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Matthew Musgrove

Matthew Musgrove

Matthew is an entrepreneur and business Advisor with a passion for change management and social empowerment. With a background in business accounting and advisory, as well clinical research project management, he strives to find strategic and sustainable solutions to business problems.



Mark Van Hoff comes from background of technical & production planning, budgeting & scheduling of major live events. As the first production co-ordinator at M-NET for Outside Broadcasts, Mark has managed major local and international productions including Miss South Africa, Miss World, multiple music events and major sports events, including the PnP Cycling Tour.​Mark co-founded Van-Man Productions in 1994, Page to Picture in 2000 and Move Media Networks in 2007. All three companies have achieved domestic success and have been well-regarded in the South African production industry.



Oluwaseun Adewuyi who is the Group Chief Finance Officer (CFO) at Caban, is a Certified Chartered Accountant, with Fellowship status at both the ACCA as well as the Institute of Public Finance and Accountancy, a UK Based industry body with a specific focus on the management of charities, not-for-profit organisations and NGOs.. Oluwaseun comes with strong business acumen and 20+ years of progressive experience in finance and operations management within well-reputed and high growth organisations Including Next Plc and Royal Mail. He has been heavily involved in impact investment across Sub-Saharan Africa and has been instrumental in the creation of a series of community schools in West Africa. Throughout his career, he oversaw a broad range of operations, including Business Strategy and Business Reorganisation, summarising the organisation’s financial status, and coordinating the preparation of tactical plans, financial forecasts, and budgets. Adept at developing and implementing effective internal control framework to maintain sound financial accountability.

tim scholtz


Tim Scholtz, who's is the Chief Operating Officer (COO) at Caban Investments, is experienced in implementing corporate governance guidelines, formulating risk management structures, process and cost optimization. Tim has a strong corporate background, having worked as COO at the South African Tourism board, was COO at the Nelson Mandela foundation and as a internal audit manager at Arthur Anderson earlier in his career.

Ben Botes


Ben Botes is Entrepreneur, VC, co-Founder, Author and Academic with a strong social conscience. Ben Involved with early stage and growth firms for the past 20 years and has been Co-founder of 9 separate businesses across Africa. Ben has directly and indirectly been involved in impact investment and the support of charities and non profits for the last 30 years. Ben is a regular speaker at the African Investment Conference in London and has been featured in Wall Street for Europe, The Guardian Small Business, BBC, the Mail and Guardian in the UK and BizCommunity, Channel 3 TV, Investors Weekly, The Cape Times, Radio 702 with John Robbie and Good Hope FM in South Africa

Dave Romero


Dave Romero is a venture capitalist and entrepreneur with a passion for making an impact. A qualified Professional Accountant, Dave has been a director in multiple financial institutions and was once the youngest Chairman on the JSE, in addition to being listed as one of Business Times’ Top 100 companies and the 40th fastest-growing company in South Africa. Dave is a core founder of the Caban Group, which aims to provide a comprehensive service offering to small businesses in return for equity. With a passion for nurturing entrepreneurs, Dave can often be found outside of the boardroom – offering advice, creating innovative funding solutions and building communities through sustainable practices.



Dr Ruben Richards is a truly inspirational South African leader. Through his peace-building seminars for criminal gangs, Dr Ruben has facilitated the longest ceasefire in the history of gang warfare on the Cape Flats. In addition to being Chairman & Founder of the non-profit Ruben Richards Foundation, Dr Ruben is an ordained cleric, company director, non-executive Chairman of Visual International Limited and was once the Deputy Director-General of the now-disbanded Scorpions.