Add-on transactions are acquisitions by a private equity platform to consolidate the market and increase group value.
Add-on transactions are part of a strategy to build investment platforms. They involve a private equity portfolio company acquiring additional businesses in the same sector. This allows the platform to grow faster, expand its reach, and strengthen its market position.
The benefits include economies of scale, reduced costs, stronger bargaining power with contractors, and broader product or service offerings. It is also a way to consolidate fragmented markets and create a more attractive target for a future buyer. Add-on is an alternative to organically developing a product/service within an existing company.
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