Add-On Acquisitions Continue Popularity

/in , /by Exit Strategies

PE firms are increasingly using strategic “add-on” (aka bolt-on) acquisitions to consolidate fragmented industries, particularly in sectors like healthcare and business services, where operational efficiencies and market share gains are achievable.

This approach to growth allows firms to create more valuable and competitive entities more quickly than organic growth, usually with lower business and financial risk. These transactions often require less capital and can be financed through existing cash flows or smaller debt tranches, thus mitigating the impact of higher borrowing costs.

This trend underscores PE firms’ preference for smaller, complementary acquisitions that can enhance existing portfolio companies through operational synergies and scale without incurring significant new debt.

Share of PE Deal Count by Type

Source: GF Data, Fall 2024

For further information on this subject or to discuss a potential business sale, merger or acquisition need, confidentially, contact Al Statz at 707-781-8580 or alstatz@exitstrategiesgroup.com.