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Vertical integration is quietly making a comeback in European private equity. While horizontal roll-ups and platform strategies remain prevalent, a growing number of investors are going vertical—acquiring up or down the value chain to unlock new margin pools, reduce operational risk, and strengthen strategic control.
Why Vertical Integration Is Rising
1. Capturing More Margin in Fragmented Markets
European sectors remain heavily fragmented. Whether in logistics, manufacturing, or food, it’s common to find small players handling isolated steps of the value chain. By integrating suppliers or distributors, PE-backed businesses can internalize costs, improve coordination, and reclaim margin previously lost to third parties.
2. Building Resilience Through Control
Post-pandemic and post-geopolitical-shock, the case for operational control is stronger than ever. In-house supply and distribution reduce the risk of critical delays, quality issues, or pricing surprises—especially important in sectors with long lead times or regulatory scrutiny.
3. Fewer Regulatory Hurdles Than Horizontal Deals
In the EU, competition authorities tend to scrutinize horizontal consolidation more closely than vertical expansion. Acquiring within the supply chain often raises fewer red flags, especially when the integration improves market efficiency or service quality.
4. An Alternative to Overcrowded Platform Plays
While platform strategies focus on market share and cost synergy, vertical integration is about owning the customer experience end-to-end. It offers operational leverage and pricing power—not just scale.
Examples of Vertical Integration in Action
Here are real-world examples of how companies operating in Europe have pursued vertical integration to strengthen their business models:
Belgium: A Fertile Ground for Vertical Plays
Belgium’s market structure makes it especially ripe for vertical integration, with several factors creating opportunity:
How openthebox Helps You Identify Vertical Integration Targets
Whether you’re looking upstream for suppliers or downstream for distribution partners, vertical integration begins with mapping the right companies along the value chain. With our searchable database of Belgian private companies, openthebox helps investors:
- Map value chains by NACE codes to locate upstream or downstream players within a sector.
- Filter by financial and operational metrics (e.g., turnover, margin, headcount) to identify scalable, healthy targets.
- Spot ownership structures (e.g., family-owned, MBO) that may be more open to integration deals.
- Surface interdependencies between companies based on sector, size, and region—key signals for strategic alignment.
Openthebox doesn’t replace dealmaking—it enhances it, by giving you data visibility and strategic clarity before you approach the market.
Conclusion
Vertical integration is more than a defensive move, it’s a way to build smarter, more resilient companies in a fragmented European landscape. With better data and clearer visibility, investors can take a proactive role in shaping the value chain—not just participating in it.
For mid-market PE firms operating in Belgium and beyond, now is a good time to look vertically.
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