As analyst Dylan Cox wrote in our 2016 Annual US Private Equity Breakdown, "add-ons keep adding up.” Additions to portfolio companies made up 64% of all US buyout activity during 2016, according to PitchBook data, an increase from 61% in 2015 and the highest total of the millennium. Until 2009, in fact, add-ons typically made up less than 50% of all deals.
The causes are plentiful, ranging from a shrinking supply of platform targets to escalating transaction multiples. You can read all about it—plus much more—in the free report.
Here, we’ll take a bit of a closer look at last year in add-ons worldwide. Which firms are driving the uptick? What sort of companies are they buying? And in what geographies are they operating?
When it comes to add-ons, the two busiest private equity firms in the world during 2016 were Audax Group (70 completed deals) and ABRY Partners (68). Together, they accounted for nearly 5% of all global add-on activity during the past 12 months, according to the PitchBook Platform. More of last year's top add-on sponsors below:
One interesting trend from the investor list is Blackstone’s seeming decline in add-on interest. After completing 50 such deals during 2015, tied for fifth-most among all investors, the massive firm dropped off to 29 add-ons worldwide last year, only 14th among its private equity peers.
Overall, activity in the B2B sector was prodigious, accounting for more than 42% of all global add-ons last year. The B2C space was the second-busiest for all PE activity in 2016, but in terms of just add-ons, it was surpassed last year by IT, which made up 15.3% of activity.
Expectedly, the vast majority of add-ons (just about 90% combined) take place within the US and Europe. Within Europe, about three-fourths of those deals are in Western Europe, while the American share is split quite evenly: the Mid-Atlantic, West Coast, South, Great Lakes and Southeast regions were each home to somewhere between 14% and 20% of all add-ons conducted during the US during 2016.