Thesis Notebook
What the academic literature explains—and where it still falls short—about buy-and-build
Buy-and-build has been practised longer than it has been well theorised. The strategy is widely used, frequently discussed, and unevenly understood. Practitioner writing usually presents it as playbooks or deal patterns; academic research touches on it across several literatures, including strategy, corporate finance, organisational learning, and M&A, but rarely as a unified phenomenon. Even the pre-deal activity that should govern how targets are chosen has been characterised as resting on a high-level, simplified, and static view of selection (Welch et al., 2020). The Thesis Notebook exists to sit between those worlds.
Neither a comprehensive literature review nor a set of best practices, the Notebook uses established theory to clarify the mechanisms, constraints, and trade-offs that shape buy-and-build as it is actually executed. Each note isolates one academic lens and asks what it helps explain, and where the lens strains when applied to serial acquisition environments.
Three commitments shape the Notebook:
First, buy-and-build is treated as a system, not a deal type. Value creation arises from the interaction of strategy, selection, integration, learning, and governance over time, not from any single acquisition. This is closer to what researchers call an acquisition-programme perspective, in which performance is judged across a sequence of deals rather than one at a time (Laamanen & Keil, 2008).
Second, theory is used as a diagnostic tool, not an answer key. Each lens highlights certain dynamics and obscures others, and the aim is sharper judgment rather than theoretical completeness.
Third, organisational limits are taken seriously. Much of the divergence between intended and realised outcomes in buy-and-build traces to constraints on attention, learning, integration capacity, and sequencing, not to bad strategy.
The seven essays in the Notebook
Resource-Based View Revisited establishes the primary lens. Buy-and-build advantage comes from accumulating and recombining heterogeneous, imperfectly mobile resources under constraint (Penrose, 1959; Wernerfelt, 1984; Barney, 1991), built through path-dependent accumulation rather than residing in the assets themselves (Dierickx & Cool, 1989).
Transaction-Cost Economics and the Build-Borrow-Buy Choice asks why a platform acquires rather than builds or contracts. Ownership wins when asset specificity, uncertainty, and the hazard of opportunism make the market too costly to govern (Coase, 1937; Williamson, 1979), a recursive make-or-buy choice that shifts as the platform grows (Capron & Mitchell, 2012).
The Pre-Deal Phase and Target Selection reframes selection as a resource-matching problem rather than a quality screen (Welch et al., 2020; Kaul & Wu, 2016). In buy-and-build, selection is the first integration decision, embedding feasibility and governance long before diligence begins. (Related: Why We Acquire: Motives Before Targets.)
Deliberate and Emergent: How the Add-On Thesis Forms shows that a platform’s acquisition strategy is neither fully planned nor accidental. It is an umbrella strategy whose specifics emerge as opportunities arrive (Mintzberg & Waters, 1985), best studied as a process rather than a discrete event (Langley, 1999).
Absorptive Capacity under Cumulative Load addresses learning directly. Acquisition experience doesn’t always compound (Cohen & Levinthal, 1990; Zollo & Singh, 2004); under sustained integration pressure, capacity can plateau or degrade, and it, not the supply of deals, is usually the binding constraint. (Related: Integration Capacity Is the Binding Constraint.)
Real Options and Buy-and-Build examines a framework that is frequently invoked but often overstated. Optionality is a useful way to think about staged investment (Kogut, 1991; Smit & Moraitis, 2010), but it overstates reversibility and discretion in serial acquisition, where commitments narrow flexibility faster than financial theory implies (Adner & Levinthal, 2004).
Buy-and-Build in the Literature steps back to assess the field. The academic work is strong at documenting prevalence, drivers, and pricing (Hammer et al., 2017, 2022; Bansraj & Smit, 2017), and weaker at explaining how repeated acquisition remains additive rather than degrading over time.
Taken together, these pieces don’t form a grand theory. They map where buy-and-build tends to hold, strain, or fail when read through the available academic work.
How to read the Notebook
The Notebook isn’t meant to be read linearly or exhaustively, though the order builds: the first five notes construct an account, the sixth tests a rival lens against it, and the last assesses the field. Which lens is most useful usually depends on the reader’s role: investors gravitate toward pricing, selection, and system-level constraints; operators focus on integration, learning, and cumulative load; scholars engage with the boundaries between theory and observed behaviour. What unites these perspectives is a shared problem: how to make sound decisions under uncertainty when organisational capacity, not opportunity, is the binding constraint. (If you’re new here, How to Read This Project lays out the full structure and the recommended reading paths across sections.)
Buy-and-build rewards clarity more than cleverness. The Thesis Notebook is my attempt to use established research to improve the quality of that clarity, while staying honest about where the research itself hasn’t yet caught up to what operators are actually dealing with.
References
Adner, R., & Levinthal, D. A. (2004). What is not a real option: Considering boundary conditions for the application of real options to business strategy. Academy of Management Review, 29(1), 74–85.
Bansraj, D. S., & Smit, H. T. J. (2017). Optimal conditions for buy-and-build acquisitions [Preliminary version]. Erasmus School of Economics.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Capron, L., & Mitchell, W. (2012). Build, borrow, or buy: Solving the growth dilemma. Harvard Business Review Press.
Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386–405.
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152.
Dierickx, I., & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35(12), 1504–1511.
Hammer, B., Knauer, A., Pflücke, M., & Schwetzler, B. (2017). Inorganic growth strategies and the evolution of the private equity business model. Journal of Corporate Finance, 45, 31–63.
Hammer, B., Marcotty-Dehm, N., Schweizer, D., & Schwetzler, B. (2022). Pricing and value creation in private equity-backed buy-and-build strategies. Journal of Corporate Finance, 77, 102285.
Kaul, A., & Wu, B. (2016). A capabilities-based perspective on target selection in acquisitions. Strategic Management Journal, 37(7), 1220–1239.
Kogut, B. (1991). Joint ventures and the option to expand and acquire. Management Science, 37(1), 19–33.
Laamanen, T., & Keil, T. (2008). Performance of serial acquirers: Toward an acquisition program perspective. Strategic Management Journal, 29(6), 663–672.
Langley, A. (1999). Strategies for theorizing from process data. Academy of Management Review, 24(4), 691–710.
Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257–272.
Penrose, E. T. (1959). The theory of the growth of the firm. Oxford University Press.
Smit, H. T. J., & Moraitis, T. (2010). Serial acquisition options. Long Range Planning, 43(1), 85–103.
Welch, X., Pavićević, S., Keil, T., & Laamanen, T. (2020). The pre-deal phase of mergers and acquisitions: A review and research agenda. Journal of Management, 46(6), 843–878.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.
Williamson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233–261.
Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: Post-acquisition strategies and integration capability in U.S. bank mergers. Strategic Management Journal, 25(13), 1233–1256.