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PitchBook Analyst Note: Additive Dealmaking

2Q 2018

PitchBook Analyst Note: Additive Dealmaking

April 16, 2018

Add-ons have only become more and more popular in recent years, with our most recent US PE Breakdown revealing that they comprised no less than 70% of all US buyout activity during 1Q 2018. Our latest analyst note, Additive Dealmaking, explores the primary drivers behind this surge in the popularity of add-ons, as well as how the overall buy-and-build strategy has evolved.

Key Highlights:

• Nearly 30% of PE-backed companies now undertake at least one add-on acquisition, compared to less than 20% that did so in the early 2000s.
• Heightened add-on activity in recent years is largely being driven by prolific buyers that pursue numerous add-ons per platform. More than 25% of add-ons are now being acquired by platforms with at least five total add-on deals.
• It takes time to execute deals and integrate businesses; as such, the median time to exit tends to be about a year longer for companies that undergo at least one add-on.