Add-on Acquisition

Definition

The purchase, or acquisition, of a smaller company that is added on to a larger platform company by a private equity firm or strategic buyer, to compliment the acquirer’s business model.

See Also

Tuck-in acquisition , private equity group.

Tips

Private equity groups often purchase a larger company (i.e., a platform company) in an industry and then make a series of smaller acquisitions that are added onto the platform company, which are known as add-on acquisitions. Strategic buyers also pursue a similar strategy when they are attempting to consolidate an industry. An add-on acquisition usually only adds a few specific skills or capabilities to the platform company, such as a new product or geographic market. Add-on acquisitions have accounted for 60% to 70%+ of all private equity transactions over the last few years.

Related Resources

M&A Guide | The 4 Types of Buyers of Businesses

Why do companies acquire other businesses?

M&A Guide | Selling Your Business to a Competitor