# Multiple arbitrage

Buying small at a low multiple and selling the whole at a higher one.

This is the core financial engine of a buy-and-build strategy, and it rewards size independent of any operating improvement. A buyer who acquires several small shops at three times earnings and later sells the combined company at six times has doubled the value of those earnings on the spread alone. That is why platform scale becomes a goal in itself.

In numbers: Acquiring shops with $2M of combined earnings at 3x costs $6M; selling the merged company at 6x yields $12M, a $6M gain from the multiple spread alone.

Source: https://searchspheresource.com/glossary/multiple-arbitrage
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