The business strategy of buying or merging small companies in the same business segment to achieve economies of scale in reducing redundant costs and gaining higher valuation multiples because of greater scaling of operations. Roll-ups in the insurance brokerage industry result in higher earnings for the acquiring entity relative to smaller local agencies and brokerages because of their placement of larger books of business at higher commissions from underwriters and access to capital markets.
For example, Waste Management became the largest waste disposal company in the United States through a roll-up of approximately 150 small local waste hauling companies in the late 1970’s and 1980’s.
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