Ammunition Supply Chain Consolidation

A roll-up strategy targeting ammunition manufacturers, specifically focusing on shotgun shell production. The idea leverages increasing ammunition prices and supply chain inefficiencies to create value through consolidation and operational improvements.

Key Points:

• Market Conditions:

  • Shotgun shell prices increased from $10 to $16 over 3 years
  • Massive shortage in the market
  • Durable business due to consistent American gun ownership
  • Growing demand from hunters and gun owners

• Roll-up Strategy:

  • Buy multiple ammunition manufacturers
  • Focus on basic products like shotgun shells
  • Optimize operations and employee allocation
  • Avoid trying to reinvent the technology
  • Build power through consolidation over time

• Business Approach:

  • Traditional private equity style roll-up
  • Focus on operational efficiency rather than innovation
  • Keep operations simple and boring
  • Target companies making basic, proven products

• Competitive Advantage:

  • Less competition from typical HBS graduates who prefer other industries
  • Contrarian approach compared to typical roll-up targets (laundromats, dentists)
  • Opportunity in an industry others might avoid

• Market Position:

  • Different from high-tech defense companies like Anduril
  • Focus on basic ammunition products rather than advanced weapons systems
  • Target existing, proven market rather than new technology