Still Growing

Build vs. buy

Greenfield or acquisition? Model both paths to the same scale and see which creates more value over the hold, and the price at which buying stops making sense.

The business at scale
Build (greenfield)
Buy (acquisition)
Both paths
Buying wins below–Purchase multiple where the two paths create equal value
Value created by building–Present value, net of investment
Value created by buying–Present value, net of price and integration
Cash payback–

Cumulative cash, before exit proceeds

What this doesn't price

  • Build risk. Greenfield plans rarely ramp on schedule. Try adding a year to see how sensitive the answer is.
  • Integration risk. Synergies assumed are not synergies captured. Try halving them.
  • Speed to market. If the window is closing, owning share now may be worth more than the math shows.
Pressure-test the thesis

Simplified model: EBITDA is used as a proxy for cash flow, build revenue and EBITDA ramp in a straight line, and both paths exit at the same multiple. Taxes, working capital and financing are excluded.

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