Private Equity Firms Increasingly Use Add-Ons for Exits Amid Stalled Market
In the current subdued private equity exit market, sponsors are increasingly relying on add-on acquisitions to consolidate platforms and enhance their chances of a successful sale. According to PitchBook's Q2 2026 European PE Breakdown, there were 2,121 add-ons in H1 2026—accounting for nearly 58% of total deals—the highest level seen over the past decade. This trend is driven by high financing costs and a preference for lower mid-market investments where valuations are more attractive and debt arrangements simpler. Richard Damming, head of PE investments Europe at Schroders Capital, explains that consolidating smaller businesses into larger platforms makes them more appealing to corporate buyers seeking ready-to-integrate assets. Add-ons acquired at 6x EBITDA can significantly increase in value when added to a platform valued at 12x EBITDA. Additionally, GPs are exploring alternative financing methods like preferred equity as traditional debt becomes harder and costlier to secure. The strategy is also being fueled by generational transitions among small business owners who often sell for less than the full potential of their companies.
Topics: add-on deals consolidation strategy exit market dynamics private equity