Examples of multiple arbitrage in private equity. Multiple arbitrage creates value at exit by selling a company at a higher multiple.
Private equity roll-up strategy is attractive largely because of the value creation achieved with multiple arbitrage. With a roll up strategy, the sponsor (private equity firm or independent sponsor) sets out to acquire and merge multiple smaller businesses into one larger consolidated company.
The private equity bidding process is filled with posturing and gamesmanship. This post explores examples of negotiation strategies.
Long before LVMH publicly announced any designs on acquiring Tiffany & Co., Arnault made the decision to build a Louis Vuitton factory in Texas, likely at least in part to win over the President of the United States in anticipation of smoothing the path for a future acquisition.