European startups are turning to rollup strategies to build scale quickly in the defence sector, and some venture capital investors are not convinced the approach will hold up, according to Sifted. The logic is straightforward enough: instead of building one company from the ground up, founders and investors are acquiring and combining smaller defence-focused businesses into a single larger platform, betting that scale and breadth will win contracts that a standalone startup could not reach. It is a strategy borrowed from private equity, now being applied by venture-backed teams in a sector that has become one of Europe's most closely watched. The scepticism from some VCs is not about the ambition behind the strategy. It is about whether rollups assembled quickly, under pressure to demonstrate scale, can actually integrate well enough to deliver on the promise they are sold on.
What this means
For a founder, a PE operating partner, or an SME owner sitting inside a fragmented defence supply chain, this is worth paying attention to, even at a much smaller scale than the headline story. A rollup is not a financing event. It is a deal execution problem, repeated many times over, under time pressure. Each acquisition brings its own diligence gaps, its own culture, its own systems, and its own customer relationships that either survive the combination or quietly do not. We take the position that too many buy-and-build strategies focus on the buying and treat the building as an afterthought. The value in a consolidation strategy is not created by signing the most deals fastest. It is created by the discipline applied before each acquisition and the planning done for how it will actually sit inside the platform afterwards. Skip that discipline and the combination simply inherits every liability sitting inside the businesses you bought.
The wider picture
Defence is the sector in the headlines this year, but the underlying pattern is not new and it is not confined to defence. Consolidation strategies tend to appear whenever capital is available, a market is fragmented, and buyers believe speed matters more than price. We have seen the same dynamic play out across technology services, healthcare providers, logistics, and professional services, usually led by private equity rather than venture capital. What is notable here is who is doing the rolling up: venture-backed teams, often moving faster and with less operational experience of integration than a traditional sponsor would bring. That speed can be an advantage when a market is genuinely consolidating around new demand. It becomes a liability when it substitutes for the groundwork that any acquisition needs regardless of who is funding it. For SME owners operating in fragmented markets, whether as a potential target or as a would-be consolidator, the same question applies: is scale being bought, or built.
How we think about it
This is exactly the territory our M&A advisory work sits in, on both sides of the table. On the buy side, when a client is pursuing a consolidation or buy-and-build strategy, we help with target identification, valuation discipline, and due diligence that goes beyond the financials into how a target will actually operate once it is inside the group. We think about integration from the first conversation, not after the signature, because the terms of a deal should reflect how hard it will be to combine, not just what the business earns today. On the sell side, when an owner is approached by a consolidator, or is considering one, we help prepare the business, build an honest picture of what it is actually worth, and manage the process so the owner is negotiating from a position of informed strength rather than reacting to whatever terms land on the table first. Preparation through to completion, on either side, is where the outcome gets decided.
Where we can help
If you are building a platform through acquisitions, or you have been approached by one as a potential target, the lesson from the scepticism around defence rollups is the same: the strategy only works if the execution behind it does too. A well-prepared seller gets a better price and better terms. A disciplined buyer avoids paying for scale it cannot actually integrate. Either way, the businesses that come out of a consolidation wave ahead are the ones that treated each transaction as a deal worth doing properly, not a box to tick on the way to a bigger story. That is the standard we hold our own work to on every transaction we advise on, regardless of size.
Whether you are weighing up a bolt-on acquisition, preparing your business for a sale, or simply want a second opinion on a consolidation strategy you are being pitched, we are happy to talk it through. If you want a better outcome on your next transaction, book a consultation.
