As analyst Dylan Cox wrote in our 2016 Annual US Private Equity Breakdown, “add-ons keep adding up.” Additions to portfolio companies made up 64% of all US buyout activity during 2016, according to PitchBook data, an increase from 61% in 2015 and the highest total of the millennium. Until 2009, in fact, add-ons typically made up less than 50% of all deals.
The causes are plentiful, ranging from a shrinking supply of platform targets to escalating transaction multiples. You can read all about it—plus much more—in the free report.
Here, we’ll take a bit of a closer look at last year in add-ons worldwide. Which firms are driving the uptick? What sort of companies are they buying? And in what geographies are they operating?
When it comes to add-ons, the two busiest private equity firms in the world during 2016 were Audax Group (70 completed deals) and ABRY Partners (68). Together, they accounted for nearly 5% of all global add-on activity during the past 12 months, according to the PitchBook Platform. More of last year’s top add-on sponsors below:
One interesting trend from the investor list is Blackstone’s seeming decline in add-on interest. After completing 50 such deals during 2015, tied for fifth-most among all investors, the massive firm dropped off to 29 add-ons worldwide last year, only 14th among its private equity peers.
Overall, activity in the B2B sector was prodigious, accounting for more than 42% of all global add-ons last year. The B2C space was the second-busiest for all PE activity in 2016, but in terms of just add-ons, it was surpassed last year by IT, which made up 15.3% of activity.
Expectedly, the vast majority of add-ons (just about 90% combined) take place within the US and Europe. Within Europe, about three-fourths of those deals are in Western Europe, while the American share is split quite evenly: the Mid-Atlantic, West Coast, South, Great Lakes and Southeast regions were each home to somewhere between 14% and 20% of all add-ons conducted during the US during 2016.
Want more info on the state of the industry? Make sure to check out our 2016 Annual US Private Equity Breakdown.
PitchBook Platform users can view the full dataset on last year’s global add-on activity here.
Article by Kevin Dowd – PitchBook