From Barbarians to builders : Realising cost synergies in DACH small to mid-cap private equity buy-and-build strategies

Background: Private equity (PE) firms increasingly employ buy-and-build (B&B) strategies, particularly within fragmented industries in the DACH region (Germany, Austria, and Switzerland). Despite the growing prominence, academic literature remains limited regarding the realisation of cost synergies within small to mid-cap funds. Such funds typically operate with constrained resources and encounter unique integration challenges, necessitating tailored strategies and deeper theoretical understanding. Purpose: This thesis investigates how small to mid-cap PE funds in the DACH region identify, prioritise, and realise cost synergies through B&B strategies. Specifically, it aims to bridge existing research gaps by examining practical synergy realisation challenges, integrating these findings with the dynamic capabilities framework. Method: This study employs an exploratory qualitative interview-based study design that is guided by a relativist ontology and a social constructionist epistemology. Primary data collection was conducted through 10 semi-structured interviews with PE professionals from small to mid-cap funds in the DACH region, complemented by a pilot interview and analysis of secondary data to enhance credibility. Thematic analysis was applied to code and identify themes and interpret the data collected. Conclusion: The findings suggest that the successful realisation of cost synergies in B&B strategies is influenced by dynamic capabilities. Sensing fragmented industries, strategically seizing acquisition opportunities, and actively transforming and integrating operational resources. The study contributes to the theoretical understanding of synergy realisation in resource-constrained environments and its relation to the dynamic capabilities framework and provides actionable insights for professionals in the DACH market executing B&B strategies.