Making $100 Million in 2-5 years, strategy of consolidation

I'm guessing most of us in this forum are small time players.. a few million dollars in turn over at max and nothing near $50or $100 million.. but the private equity, lbo and hedge fund guys make that kind of money all the time..

Anyone trying to do anything in these fields..?

The strategy of consolidation is a food for thought for most of us as it requires capital and a good company foundation before embarking on such a journey, but I think it has direct application in small internet business too.. mainly for people who hopes to make $20..30..or even $100 million in a few short years.

I personally think this is the wisest way to grow a company exponentially.

I hope this post gives you a new mindset on how to grow a business - the strategy of consolidation can be applied to internet business environment as effectively as it can is applied in building large companies in short period of time.

The basic strategy is to identify fragmented industries (with many acquisitions candidates), acquire businesses and achieve critical mass(acquiring companies to own a critical portion of market share) then sell up at a huge premium.

Here's an excerpt which better explains the strategy of consolidation..

The Strategy of Consolidation:
The Secret of Exponential Growth

Growing a company from scratch relies on successful internal growth and usually takes many years of hard work. During that time success is often measured in profit margins of 10%. 15% or even more. Entrepreneurs often find themselves spending more time counting modest revenues and wondering whether they can pay the rent next month. Internal growth requires time that could be better spent focusing on external growth Remember? Kissing frogs? Seeking opportunities?

Building groups of enterprises(websites) through acquisition however equals external growth and as such can be achieved in a relatively short time-frame, maybe two- five years, with staggering financial rewards.

Quantum Leap practitioners search for, identify, evaluate and target fragmented industries. A fragmented industry is one in which several, dozens, even hundreds of companies(websites) compete quite independently within a marketplace, the combined revenues of which have a significant over all value.

Consolidation of a fragmented industry is the process whereby some or all of the individual companies operating within the same market niche are acquired, normally through leveraged buy-outs and put together as a new "group" ofcompanies. The objective is to generate a combined value in this group,
and achieve a synergy by which that bottom-line value is substantially greater than the sum of the individual operations.

And here's the beauty of such a consolidation. The net difference between the new combined value ofthe group and the cost ofacquiring these companies can amount to a multi-million capital gain."

Consider for one moment, the following household names:

• Exxon Mobil
• The Virgin Group
• Unilever
• Time Warner Aol
• Grand Metropolitan
• Thorn EMI
• General Motors
• Proctor and Gamble
• American Airlines
• TWA
• The Disney Corporation
• Bank ofAmerica
• Chevron Texaco
• US Steel
• Daimler-Benz
• IBM

The most significant factor common shared by each of the above companies is that they all began as the dreams of determined individuals, who then built their business up into a legend - largely through buying, selling and consolidating companies (e.g. Richard Branson - Virgin Group).

Get the point? Real wealth is created through the repeated acquisition, sale and/or floatation (IPO) of businesses. (Taken from the book "Building your own Guthrie - Dan Pena)

If you can resonate with what is being discussed here, I would love to know your thoughts on building an acquisition hungry internet company.