Blackstone's Julia Kahr at the Summit

In 2009, Blackstone, the New York-based alternative asset and financial services firm, committed to invest up to $750 million into Summit Materials, a new company in the aggregates sector (i.e., construction materials, such as crushed stone, sand, gravel, cement, asphalt, and ready-mix concrete). Summit intended to execute a roll-up strategy by consolidating smaller companies acquired at relatively low multiples into an integrated company that would trade at a higher exit multiple and have a greater total enterprise value (TEV) than the sum of the acquired parts.
The case study is set in 2012, when, after deploying $483 million of capital toward acquisitions, Summit was not performing as well as forecast. Blackstone’s investment committee gave Blackstone then-Managing Director Julia Kahr, along with Summit CEO Tom Hill and the deal team, one month to report back with a recommendation for the investment’s future. In the case, Kahr is faced with the decision to recommend to: 1) continue the roll-up strategy, funding additional Summit acquisitions; 2) pause the roll-up strategy in order to invest in operations, upgrade the management team, improve due diligence and underwriting processes, and enhance finance and IT systems while waiting for the market to pick up; or 3) exit the investment.