M&A Science (Libsyn hub)
M&A Roll-Up Playbook: How Zayo Did 45 Acquisitions and Returned 8.5x | Dan Caruso (Part 1)
Why It Matters
Understanding Caruso’s end‑to‑end framework helps investors and operators avoid common pitfalls in high‑growth roll‑ups, especially in capital‑intensive infrastructure sectors. The episode is timely as many firms are seeking scalable growth through acquisitions, and Caruso’s proven IRR‑focused approach offers a roadmap for sustainable value creation.
Key Takeaways
- •Zayo executed 45 acquisitions, achieving 8.5x return.
- •Focus on “fiber orphan” assets and accidental owners.
- •Early deal experience prevents costly mistakes for first-time acquirers.
- •Prioritizing genuine value over optics drives sustainable growth.
- •Investors added capital after rapid 25x returns in two years.
Pulse Analysis
Dan Caruso’s journey from Ameritech to Level 3 and finally Zayo reads like a master class in infrastructure roll‑up strategy. After the telecom bust, he identified “fiber orphan” assets—stand‑alone networks left behind by larger players—and “accidental owners” who inherited profitable but overlooked fiber routes. By mapping these orphaned assets and validating cash‑flow positivity, Caruso built a thesis that turned a fragmented market into a high‑growth acquisition pipeline, laying the groundwork for Zayo’s aggressive expansion.
Execution mattered as much as the thesis. Caruso stresses buyer‑led discipline, insisting that first‑time acquirers gain low‑stakes deal experience before tackling strategic, capital‑intensive purchases. He warns against chasing optics; genuine value creation, measured by IRR and cash‑flow, trumps headline revenue growth. Integrating dozens of networks required a rigorous post‑deal process, from automated pipeline management to disciplined capital allocation, ensuring each acquisition added real operational leverage rather than merely inflating balance‑sheet numbers.
The results speak loudly: Zayo completed 45 acquisitions, delivering an 8.5× equity multiple and, in early deals, a staggering 25× return within two years. This performance attracted additional private‑equity capital, allowing the roll‑up to scale rapidly while maintaining disciplined integration. For CEOs and investors eyeing telecom or broader infrastructure roll‑ups, Caruso’s playbook underscores the importance of a data‑driven thesis, early transaction learning, and relentless focus on cash‑flow generation to achieve sustainable, high‑multiple exits.
Episode Description
Dan Caruso, Managing Director, Caruso Ventures; Founding CEO of Zayo Group
Dan Caruso built Zayo from a startup into an $8.5B bandwidth infrastructure platform through 45 acquisitions. In Part 1, he walks through the full buyer-led playbook — how the thesis was built on a contrarian bet that everyone else got wrong, how proprietary deals were sourced through early relationship-building, and why fast integration wasn't a reputation problem — it was a competitive advantage.
He also breaks down the metric trap most roll-up operators fall into: mistaking EBITDA growth for true value creation. If your board is tracking acquisitions individually or your deal structure is loaded with earnouts, this conversation will challenge how you're running the program.
What you'll learn:
How to identify and build a contrarian acquisition thesis with investor alignment
Why proprietary deal flow is a brand and relationship problem, not a sourcing problem
How Zayo executed an unsolicited, fully funded offer on a larger public company — and won
Why tracking individual acquisitions kills synergies in a roll-up
When earnouts hurt more than they help — and what to use instead
How clean, all-cash offers win on certainty, not price
Dan's approach to thesis validation, investor alignment, and platform value creation is documented in the Roll-Up Readiness Assessment inside the Intelligence Hub, a stage-gated guide built directly from this conversation. Access inside the Intelligence Hub — → Access inside the M&A Science Hub — members only.
This episode of M&A Science is presented by DealRoom.
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Episode Chapters
[00:02:00] Introduction: Dan Caruso and the Zayo Story
[00:03:51] Background: From Ma Bell to MFS to Level Three
[00:08:58] Lessons from WorldCom: What Fake Value Creation Looks Like
[00:10:35] What First-Time Acquirers Get Wrong
[00:12:39] Building the Zayo Thesis: Fiber Orphans and Accidental Owners
[00:17:20] Raising Capital When You Have a Track Record
[00:23:50] What Must Be True for the Thesis to Work
[00:26:54] Why EBITDA Doesn't Measure Value Creation
[00:29:15] The Danger of Tracking Acquisitions Individually
[00:31:17] What Actually Drove Zayo's Success
[00:36:10] Convincing Sellers: Proprietary Sourcing and Relationship Strategy
[00:45:30] The Above Net Acquisition: Unsolicited, Fully Funded, at a Conference
[00:51:02] Negotiation Tactics: Unpredictability, Silence, and Team Play
[01:02:16] Deal Structure: Why Zayo Avoided Earnouts
[01:03:56] Clean Cash Offers and Certainty of Close
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