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Volume of Add-On Deals as a Proportion of Total Buyout Deals

by Jonathan Parker

  • 16 Jun 2011
  • PE

The number of add-on deals as a proportion of total buyout activity has seen a significant increase in recent years, a trend that indicates that buyout firms are focusing more on their current portfolio companies, expanding these companies through add-on acquisitions.

From 2006 through to 2008, add-ons remained at a steady level, accounting for just under 20% of the total number of deals completed by fund managers globally. This figure increased to 25% in 2009, and maintained the same levels in 2010. However, so far this year a third of all deals announced have been add-ons.  In contrast, the level of LBOs has fallen from above 55% of all deals in the buyout boom-era of 2005-2007 to 39% in 2011. With 32% of 2011 deals focused on the expansion of current portfolio companies through add-ons, we are witnessing private equity firms actively involved in the consolidation of markets in which their portfolio companies operate.

Notable add-on deals this year have included the announcement that Infor Global Solutions, a portfolio company of Golden Gate Capital, is to acquire Lawson Software in a take-private deal valued at approximately $2 billion, and in another deal also valued at $2 billion, China National Blue Star Group, a Blackstone Group portfolio company, acquiring Elkem, a materials company based in Norway.

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