Executive Summary
In Private Equity, the Buy-and-Build strategy is the primary lever for driving alpha. However, the traditional approach to integration, treating each acquisition as a bespoke project, leads to the Franken-stack phenomenon: a disconnected, inefficient mess of legacy systems. This blog argues that to achieve true scale and maximize exit multiples, PE firms must shift from manual integration to a digital ingestion engine. By leveraging NetSuite as a unified platform, firms can create a repeatable plug-and-play model that onboards new entities in a couple of months, ensuring real-time visibility and operational harmony from Day 1.
I. The Bolt-On Nightmare: Why Traditional Roll-Ups Fail
The math of a roll-up is enticing: acquire smaller competitors at a 4x–6x multiple, integrate them into a platform company, and exit at a 12x–15x multiple. But as many Operating Partners have learned the hard way, the Build part of Buy-and-Build is where the IRR (Internal Rate of Return) goes to die.
The Rise of the Franken-stack
In the rush to capture market share, technology is often an afterthought. Entity A uses QuickBooks; Entity B uses a 20-year-old on-premise Sage instance; Entity C uses a proprietary system built by the founder’s nephew.
The result is a Franken-stack: a patchwork of APIs, manual Excel exports, and human middleware (highly paid accountants doing data entry). This fragmentation creates a visibility gap, where the GP has no idea what the true cash position or margin profile of the portfolio is until 20 days after the month-end close.
The Thesis: From Integration to Ingestion
Success in the current PE landscape requires a fundamental mindset shift. You are no longer integrating companies, you are ingesting them into a high-performance machine. To do this, you need a digital ingestion engine, a standardized, repeatable infrastructure that treats every new acquisition like a software update rather than a heart transplant.
II. The Architecture of a Digital Ingestion Engine
A Digital Ingestion Engine is built on the philosophy of functional standardisation. To move away from the bespoke project trap, the engine requires a core cloud-native ERP, specifically NetSuite, to act as the organization’s single source of truth.
Unlike legacy systems that struggle with multi-entity complexity, NetSuite’s architecture provides the standardized chassis required for rapid ingestion. It allows the platform company to establish a global chart of accounts and unified reporting standards before the first acquisition is even signed. By leveraging NetSuite as the foundational layer, PE firms can stop worrying about the unique quirks of an acquisition’s legacy data and instead focus on mapping that data into a pre-configured, scalable environment.
Click here to learn more about: Consolidated Visibility: Creating a Single Source of Truth for Multi-Entity Portfolio Management.
1. The Golden Core Template
Before the first bolt-on is even identified, the platform company must establish its Golden Core. This is a NetSuite instance that includes:
• Standardized Chart of Accounts (COA): A unified financial language that every entity must speak.
• Global Dimensions: Pre-set reporting classifications (i.e. Department, Class, Location) that allow for instant slicing of data across the portfolio.
• Automated Intercompany Logic: Built-in rules for eliminating intercompany transactions, essential for automated financial consolidation.
2. The 90-Day Ingestion Playbook
The engine is powered by a strict, repeatable timeline. While the business operations might take longer to merge, the digital ingestion must happen fast.
• Days 1-30 (Discovery): Mapping legacy data to the Golden Core.
• Days 31-60 (Configuration): Setting up the new subsidiary in NetSuite OneWorld.
• Days 61-90 (Migration & Training): Pushing open balances and training the new team on the platform’s standard operating procedures (SOPs).
Click here to learn more about: The Platform Play: How to Migrate Add-On Data into NetSuite Without Disrupting Operations.
III. Moving from Bespoke to Industrialized
The reason most integrations fail is that firms treat every acquisition as a special case. They allow the acquired founder to keep their legacy CRM or their specific billing cadence. This is a mistake.
The Cost of Specialization
Every exception you make for an acquisition adds a layer of technical debt. If Entity D is allowed to keep its own billing system, your finance team now has to manage a separate reconciliation process. Scale is achieved through conformity.
The Industrialized Approach
An industrialized engine uses tools like NetSuite OneWorld to manage multi-entity complexities. According to Bain & Company’s Global Private Equity Report, the most successful firms are those that prioritize operational excellence over simple financial engineering. An industrialized tech stack allows you to:
• Centralize AP/AR: One team can manage the books for 20 entities.
• Unified Procurement: Leverage the aggregate spend of the entire portfolio to negotiate better vendor rates.
• Rapid Due Diligence: When your platform is standardized, you can audit a potential acquisition’s data more accurately, because you know exactly how it will fit into your engine.
Click here to learn more about: Why Good Enough Tech is the Enemy of a Successful Roll-Up Strategy.
IV. The Role of NetSuite in Solving the Nightmare
Why NetSuite? For a PE roll-up, NetSuite is a valuation multiplier. Its cloud-native architecture means there is no hardware to install at the new acquisition’s office.
Multi-Entity Mastery with OneWorld
NetSuite OneWorld was built for the bolt-on strategy. It allows a parent company to sit at the top of the hierarchy while spinning up child subsidiaries in minutes.
• Real-time Visibility: The Operating Partner can see the consolidated P&L across all entities at 2 PM on a Tuesday.
• Local Compliance: If an acquisition is in a different country, NetSuite handles the local tax (VAT/GST) and currency conversion automatically.
V. Future-Proofing for the Exit
The ultimate goal of any PE-backed company is a successful exit. Nowadays, buyers (especially strategic ones) are looking for a scalable technology ecosystem.
Increasing the Exit Multiple
A Franken-stack is a liability during an exit. A sophisticated buyer will see the mess of legacy systems and deduct the cost of a future CRM+ERP implementation from the purchase price. Conversely, a company with a unified, clean NetSuite environment commands a premium. It proves that the business is turn-key and ready for the next level of scale.
Technical Due Diligence (TDD)
Modern exits involve rigorous technical due diligence. A digital ingestion engine ensures that your data is clean, your licenses are compliant, and your infrastructure is modern. This transparency reduces deal friction and prevents late-stage price chipping.
VI. Your Tech Stack is an Accelerant
PE firms that continue to view technology as a back-office cost will continue to struggle with integration debt and stagnant margins.
The firms that win are those that treat their digital infrastructure as a core part of their investment thesis. By building a digital ingestion engine, you turn the chaos of M&A into a streamlined, repeatable process. This is how you transcend a fragmented portfolio to become a truly integrated enterprise platform.
Summary of Key Takeaways:
• Standardize Early: Build your Golden Core in NetSuite before you start the roll-up.
• Enforce Conformity: Do not allow acquisitions to keep legacy systems that create data silos.
• Focus on Velocity: Aim for a 90-day ingestion cycle to capture synergies quickly.
• Maximize Exit Value: A unified platform is a tangible asset that increases your exit multiple.
How Trajectory Can Help
At Trajectory, we specialize in helping PE firms build these engines. We can design the Ingestion Playbook that allows you to scale.
