PE Spotlight: Deal count doesn't tell the full story with U.S. add-ons

June 3, 2016

A look at the pure quantity of add-on deals getting done shows a significant decline during the first five-plus months of 2016. Only 613 such acquisitions have been completed so far this year in the U.S., according to the PitchBook Platform, and if that pace maintains, deal count won’t come close to approaching the 1,790 add-ons last year—nor the 1,743 from 2014.

Pull back the lens, however, and a bit of a different picture emerges.

Numbers have declined this year across the entire spectrum of deal types, and add-ons actually account for a rising proportion of the buyouts taking place: Those 613 bolt-ons make up roughly 63% of all U.S. buyout activity this year, an uptick from 60% last year, 59% in 2014 and 58% in 2013.

A key sector responsible for that increase has been healthcare. Investors have completed 105 add-ons in the space so far, comprising 17% of all add-on deals, up from 14% last year and 13% in 2014. On the other side, activity has declined in the B2C sector, with such transactions making up just 12% of add-ons this year—down from 16% in 2015. The plurality of deals remains concentrated in the B2B space, at 42%, a narrow rise from last year’s 41%.

Here’s a full breakdown of 2016’s add-on activity by primary industry sector:

Source: PitchBook Platform

 

Two primary drivers of this year’s add-on activity have been ABRY Partners and Audax Group, each of which has executed 23 deals (HarbourVest ranks a distant third with 14 deals). ABRY’s acquisitions have been concentrated on two insurance platforms—the Hilb Group and Confie Seguros—sponsoring seven acquisitions for each since the start of 2016.

Audax’s activity has been a bit less centralized, ranging across 16 different platform companies; the firm has been particularly aggressive with Florida-based Advanced Dermatology & Cosmetic Surgery, completing five add-ons.

 

PitchBook users can check out much more of our info on add-ons during 2016. Want access to the data? Contact us today for a free trial.

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