Consolidation in a Fragmented Sector: a Favorable Context for Equity Financing

External growth is one of the strategies for rapidly reaching a critical size. We study 108 French SMEs in the medical laboratory sector that have made external growth investments. We show that reaching a critical size thanks to external growth generates economies of scale that improve the operating margin rate. We then note that external growth requires turning to equity financing, given that, in a sector that is consolidating, payments made with shares play a significant role that is complementary to fund-raising.