Add-on Acquisition

Definition

An add-on acquisition (also called a bolt-on) is a company acquired by a private equity firm to complement and grow an existing platform company. Add-ons are typically smaller than the platform and are pursued to expand geographic reach, add capabilities, increase market share, or achieve operational synergies.

Context

Add-on acquisitions are discussed in Ep. 23 as a secondary origination channel for VRA Partners. Chris Reilly describes VRA's growing buy-side practice working with sponsors on add-on acquisitions. For boutique bankers, understanding a PE firm's active portfolio companies and add-on criteria is part of building a productive relationship — it creates opportunities for the banker to surface relevant targets.

Related Terms

• Platform Company — the foundation business that add-ons complement
• Private Equity — the buyer pursuing add-on strategies
• Deal Flow — add-ons create additional deal flow for bankers
• Origination and Deal Sourcing