The path to building value differs markedly between these models. While roll-ups typically start with platform acquisitions in the $5 million to $10 million range before adding “tuck-in” acquisitions that are much smaller, holding companies often target smaller businesses around $1 million to $3 million. A platform business in a roll-up normally has the brand and back office functions that will be shared by future acquisitions of the roll-up.

In addition to creating value through operational leverage, a roll-up also sees value through multiple expansion. This occurs when the multiple a buyer will pay for the roll-up is higher than the multiple a buyer would pay for any single company. A large driver of multiple expansion is unlocking more financial buyers who prefer buying larger companies. Private equity buyers place a premium on scale as it means that any change they make will have a larger impact on EBITDA or revenue (e.g., a 2% cost saving on a $500K EBITDA business may only increase profitability by ~$25K, but a 2% cost saving on a $10M EBITDA roll-up may increase profitability by $500K).

"A lot of times for a roll-up, what most people are doing is following whatever industries have the most appeal for large buyers, which is mostly private equity," Goodrich said. This exit-focused approach means roll-up operators often target fragmented industries where consolidation creates clear value. Healthcare practices and collision repair shops have become popular roll-up targets because larger players see value in consolidated operations. By buying and integrating multiple dental practices or repair locations, operators can achieve better vendor terms and standardize customer service.

Roll-up success stories like Stress-Free Auto Care, which consolidated more than 12 shops, demonstrate how rapid scaling can attract premium valuations from larger buyers.

Holding companies create value differently. Rather than seeking operational synergies, they focus on strategic improvements at each portfolio company. Success depends more on strong general managers and proven operational playbooks than integration expertise. "For Holdco, it's much more individual execution of that business," Goodrich said. "It's probably just super strong operating partners, GMs within that business."

Typically, the owners of holding companies are less focused on a near-term exit to a strategic or financial buyer for the entire group and are more focused on buying and holding for the long haul.

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