Roper Technologies: Exploiting M&A Market Inefficiencies

How Brian Jellison transformed a cyclical pump company into a $30 billion software conglomerate by acquiring niche businesses that larger buyers ignored.

Zig When Others Zag

Brian Jellison became Roper’s CEO in 2001, growing its market value from ~$1 billion to $30 billion when he retired in 2018. He did it by acquiring niche, high-cashflow businesses with small total addressable markets that larger buyers like Oracle and Microsoft had no interest in.Jellison was miffed GE sold NBC Universal for 10x EBITDA only to buy a capital-intensive oil and gas asset for 12x. He saw a valuation inefficiency he could exploit.

At Ingersoll-Rand, Jellison observed that smaller instrumentation and controls businesses had margins twice what the main suppliers earned, with limited investment needs. But the big players were chasing “razor/razorblade” acquisitions at premium prices.