Add-ons

A tougher lending market and AI uncertainty are pushing software investors toward add-ons and growth equity deals.

The ratio of add-ons to buyouts has reached a decade high.

GPs are leaning into buy-and-build strategies to grow their portfolios in Europe, spending €207 billion on add-on deals this year.

PE activity in France tumbled to its lowest level in over a year in Q1 2025, as economic headwinds, political uncertainty, and dwindling exit opportunities pushed investors toward safer bets.

A Texas lawsuit’s dismissal could thaw a portion of the frozen deal environment.

Despite a strong year in deal count that surpassed pre-pandemic levels, PE investors in healthcare services face challenges ahead.

European PE saw growth in certain areas of deals, exits and fundraising last year.

PE-backed portfolio companies are acting on the opportunity to capitalize on the slumping valuations of venture-backed companies and pursue add-ons at cheaper prices than they could find two years ago.

Healthcare-related PE deal value fell over 60% in 2023. And PitchBook analysts expect more declines in the new year.

Dealmakers expect PEs to focus on portfolio management next year, using strategies like add-ons and carveouts to bolster their portfolio companies.

Add-on deals have escalated significantly as a share of PE activity. Antitrust regulators are concerned that roll-ups could stifle competition.

Private equity firms have modified their buyout playbook to adapt to a tightening credit environment.

Thoma Bravo’s investment in healthcare analytics company Bluesight is another example of PE firms forgoing LBOs in favor of add-on and growth transactions in 2023.

Private equity finds some relief in add-ons acquisitions as the affordable debt supply dwindles, making large leveraged buyouts difficult to finance.

Buyers have more power to demand favorable terms now. Sellers agree to provisions deferring or financing part of the purchase price to close deals.

The worker shortage across the US healthcare system is restricting private equity dealmaking in the sector as some businesses struggle to grow and higher payrolls cut into margins.

Take a closer look at five key trends from our Q3 2022 US PE Breakdown, which explores how PE firms are navigating a challenging market.

PE add-ons are benefiting from companies looking to consolidate their market position.