What You Need to Know About Add-Ons

By Generational Equity


The latest data from Pitchbook illustrates a trend that we have been following for years:

Add-ons have become a significant strategy pursued by more and more private equity firms!

In fact, for the first time since Pitchbook has been tracking this data, nearly 70% of all PE acquisitions were add-ons in 2019.

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You can download the entire report using this link:

So why is this trend significant?

Because it opens up an entire buyer universe for your business. Most business owners that we meet with at our exit planning meetings have no idea how active PE firms are in their industries. Many of these transactions fly under the radar screen because of their size. However, the reality is in most industries today, there are active PE firms that specialize in making add-on acquisitions.

And we fully expect this trend to continue in 2020 despite the current economic uncertainty we are facing. In fact, based on a survey recently released by Ernst & Young, professional buyers are fully expecting to ramp up their activity once economic normalcy starts to return.

What will these buyers be looking for? Well-run, privately held companies with the opportunity to bolt them on to their existing platform companies.

This is why we are recommending all business owners take stock of their exit plans. These plans may be on hold temporarily, but the reality is now is a very good time to focus on stabilizing your business so that in a few short weeks, when the economy is re-opened, you are ready to act.

As we have said before, we have yet to meet a business owner who regretted starting his/her exit journey too early.

The fact is this too will pass and, when it does, you should be prepared to act quickly. Fortunately for you, Generational Equity, the leading lower middle market M&A advisory firm for years, is here to guide you. Use the following links to learn more about us and how our professional deal teams could help you to reach an optimal exit:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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