From steady growth to pandemic-driven surges, private equity acquisitions have shifted from a platform-dominated market to a post-COVID era where add-ons now lead the charge.
From 2016 to 2020, both platform and add-on acquisitions saw steady increases, with platform deals typically outnumbering add-ons at a 4:1 ratio. However, the onset of the COVID-19 pandemic marked a turning point, with both types of acquisitions surging as government stimulus poured excess capital into the economy.
After COVID, the dynamics shifted further. The gap between platform and add-on acquisitions narrowed, eventually converging to a 1:1 ratio by 2023. More recently, during the last few months, add-ons have significantly outpaced platform deals, signaling a shift in strategy toward consolidation and smaller, more targeted investments.
Partly fueling the rise in add-on acquisitions is the prior surge in platform acquisitions – a greater number of platforms investments provides more opportunities for future add-ons.
In summary, the PE acquisition market has evolved from steady growth to pandemic-driven surges and is now transitioning to an add-on-centric approach in response to changing market conditions.
To explore more data on add-on investments, we encourage you to read our articles about the industries shaping the future of add-on investments, and which private equity firms are leading add-on investments, by investment size.