At Platinum Ridge, we believe that disciplined value investing is the foundation of long-term success in private equity. Our acquisition strategy is built around the classic principles championed by Benjamin Graham and Warren Buffett. We buy fundamentally strong businesses at attractive prices. Then, we improve them through operational excellence. Finally, we hold them for compounding value.
Why Value Investing Matters in Roll-Ups
Roll-ups involve acquiring multiple companies within the same industry and consolidating them under one platform. The strategy can create significant economies of scale, expand distribution, and increase market share. Nevertheless, success depends on selecting the right targets — businesses with durable value, not just short-term momentum.
Value investing gives us the lens to find companies that are:
- Undervalued compared to their intrinsic worth.
- Cash-flow generative with proven customer demand.
- Strategically positioned in fragmented industries where consolidation multiplies growth.
- Stable and resilient, even in economic downturns.
Our Choice Process
1. Intrinsic Value First
We start by calculating the true economic worth of a company. We use discounted cash flow (DCF), asset-based valuation, and earnings power analysis. We look beyond temporary market conditions to find businesses trading at a discount to their long-term potential.
2. Margin of Safety
Every acquisition must meet our strict margin of safety threshold. This means the buy price is substantially lower than our conservative estimate of intrinsic value. This protects us from downside risk while allowing upside potential to compound.
3. Quality Over Quantity
Not all inexpensive companies are good value. We focus on businesses with:
- Strong balance sheets.
- Loyal customer bases.
- Competitive advantages (brand, distribution, or specialized skill).
- Capable management teams open to collaboration.
4. Synergy Potential
Beyond individual company value, we measure how well each target fits into our broader roll-up strategy. We seek distributors, wholesalers, and logistics operators. Integration creates efficiency. It strengthens supply chains and increases bargaining power with vendors and customers.
5. Long-Term Compounding
Our investment horizon prioritizes sustainable returns over quick flips. We acquire undervalued businesses and improve them with technology, shared services, and AI-driven analytics. This approach creates compounding growth. It benefits investors, employees, and communities alike.
Why This Approach Works
Value investing prevents us from chasing fads or overpaying for short-lived growth. It keeps our focus on fundamentals — cash flow, balance sheet strength, and real economic value. United with the roll-up model, this approach unlocks hidden potential in fragmented industries and builds platforms that dominate their sectors.
Conclusion
Our roll-up targets are not just “cheap companies.” They are high-quality businesses temporarily mispriced by the market, chosen with discipline, patience, and a long-term view. We apply value investing principles. This strategy helps us deliver sustainable returns. We also build stronger and more efficient businesses. These businesses serve their communities and our investors.
