--- title: Buy-and-build gains ground in private equity contentType: article date: 2026-09-29 slug: buy-and-build-gains-ground-in-private-equity author: - Jayda Etienne accessLevel: Public insightType: Second Look | Preqin First Close --- *SECOND LOOK | PREQIN FIRST CLOSE* # Buy-and-build gains ground in private equity **Private equity firms are using buy-and-build strategies to pursue portfolio growth, but pricing, integration, and operational execution may shape outcomes** Private equity firms find growth through portfolio add-ons. In a sluggish exit environment – with valuation expectations remaining elevated – we recently explored in Preqin First Close [how buy-and-build strategies are a central feature of sponsor-backed investing](https://go.preqin.com/webmail/909852/2157059939/51a79948ecc803c0b9206ddffb0ab87faa590c89187fe7b60692740fc9a427f6).  According to Preqin's [Deal Flow Monitor: H1 2026](https://preqin.com/insights/research/reports/deal-flow-monitor-h1-2026), add-on acquisitions accounted for more than half of global private equity deal count during the first six months of the year (Fig. 1). The data highlights how firms are using acquisitions to accelerate growth within existing portfolio companies, rather than relying solely on new platform investments. GPs are continuing to pursue consolidation opportunities intended to support operational improvements, expand market reach, and build scale.  **Fig. 1: Add-ons consistently account for more than half of private equity deals** Breakdown of private equity deal value,* by type *Excludes private credit and LP-direct deals **Includes company formations, joint ventures, mergers, recapitalizations, and restructurings Note: Our H1 2026 aggregate deal value here excludes the February 2, 2026 $250bn SpaceX–x.AI Corp. merger owing to the non-sponsor-backed nature of the deal. The deal is included on the Preqin Pro platform Source: Preqin, data as of July 2026 This chart is taken from [Deal Flow Monitor: H1 2026](https://pro.preqin.com/insights/research/reports/deal-flow-monitor-h1-2026), a [Preqin Private Markets Research](https://www.preqin.com/our-products/insights-plus) report. ##### **Why buy-and-build is proving resilient**  For much of the past decade, private equity has benefited from falling interest rates, abundant leverage, and valuation multiple expansion. However, current market conditions have increased the emphasis on operational value creation within portfolio companies.  FTI Consulting’s 2026 Private Equity Value Creation Index shows the firms that outperformed have ‘moved beyond financial engineering to accelerate value through [commercial intensity, AI-amplified execution, and M&A discipline](https://www.fticonsulting.com/insights/reports/private-equity-report)’.   Its survey of more than 550 senior private equity leaders revealed M&A – including add-ons, tuck-ins, and vertical integrations – has been the ‘breakout’ growth lever. In 2026, M&A has become the number one priority for firms, compared with the lowest priority in 2025. FTI’s survey also saw 24% respondents rank M&A as the top value generator, up from just 7% last year. This shift reflects a broader evolution in the private equity value creation playbook. According to Alvarez & Marsal in its European Private Equity Value Creation Report 2026, returns are ‘[increasingly being driven by hands-on operational improvement](https://www.alvarezandmarsal.com/thought-leadership/european-private-equity-value-creation-report-2026) rather than favorable market conditions.’  ##### **Financial services and insurance lead the way** Financial services and insurance offer a clear illustration of how buy-and-build strategies are reshaping sponsor-backed deal-making. According to Preqin data, the proportion of private equity transactions in these sectors involving add-on acquisitions has increased from approximately 10% in 2020 to 16% in the first half of 2026 (Fig. 2). Our Deal Flow Monitor: H1 2026 report highlights potential drivers of activity, including fragmented markets, recurring revenue models, client retention, and opportunities for consolidation. **Fig. 5: Financial & insurance services gradually gaining add-ons market share** Share of private equity add-ons* and non-sponsored deals exposed to the financial and insurance services sector *Excludes private credit and LP-direct deals Source: Preqin, S&P CapIQ, data as of July 2026 This chart is taken from [Deal Flow Monitor: H1 2026](https://pro.preqin.com/insights/research/reports/deal-flow-monitor-h1-2026), a [Preqin Private Markets Research](https://www.preqin.com/our-products/insights-plus) report. Recent deals include Arizona-based Freestone Insurance Group’s acquisition of Chicago-based employee benefits firm 360 Benefits earlier this month to build a presence in the Midwest. Freestone is backed by Shore Capital Partners, which took the platform private in June 2025.  In August, Carlyle-backed investment advisor MAI Capital Management acquired OG Private Wealth, which manages more than $550mn in assets from a client base of entrepreneurs, business owners, and affluent families.  Also in wealth management, British financial planning company Finli Group, backed by New York-based JC Flowers & Co, completed 13 acquisitions in the first half of this year, adding more than £500mn in assets and bringing the firm’s total AUM to over £8.7bn.  ##### **Energy and industrials also embrace consolidation** According to Bain & Company's M&A Midyear Outlook 2026, strategic M&A (including private equity add-ons), is [gaining momentum across all industries](https://www.bain.com/insights/m-and-a-midyear-outlook-2026-a-winners-paradox/) as executives seek efficiency, adaptability, and long-term growth. Data from the consultancy shows strongest deal value growth across energy and natural resources, as well as industrials, with a CAGR of 29% and 15%, respectively, from 2024 to 2026. What’s more, Bain says Europe has become a hotspot for deal-making, with Europe, the Middle East, and Africa M&A transaction value up 77% as of May 2026. Preqin pro data also reflects this. So far this year, there have been 698 add-ons and mergers within industrials, with an aggregate deal value of $45.9bn. That’s more than double the 2024 value total (808 deals, with aggregate value of $13.8bn) and likely to match or surpass 2025 figures (857 deals, $43bn aggregate value). Ongoing reshoring efforts, supply chain realignment, and growing demand for automation have created opportunities for firms to assemble larger, more capable manufacturing and industrial services platforms. For example, in April, Revelar Capital-backed Steele Solutions acquired custom sheet metal manufacturer Maysteel. The acquisition aligns with Steele Solutions’ strategy to extend into the data center infrastructure ecosystem. It followed a series of add-ons by Maysteel since its acquisition by Littlejohn Capital in April 2017. These include the purchase of DAMAC Products, a California-based manufacturer of data center infrastructure equipment, and the acquisition of Star Precision, a Colorado-based provider of sheet metal fabrication services. In energy and natural resources, Preqin data shows the number of add-on acquisitions total 296 year-to-date, with aggregate value hitting $26.4bn, up from $17.7bn across 393 deals in 2025, and $22.3bn across 368 deals in 2024. The convergence of [technical disruption brought on by AI and energy-intensive data center expansion](https://www.pwc.com/gx/en/services/deals/trends/2026/energy-utilities-resources.html) is prompting deal-makers to build larger, more diversified energy businesses positioned to benefit from these structural themes, argues PwC.   ##### **Execution will be the key differentiator** Buy-and-build may offer sponsors a credible route to growth in a slower exit market, but acquisitions alone do not create value. Outcomes also depend on disciplined pricing, effective integration, and a clear operational rationale for each add-on. As Bain says: ‘M&A deals need to move the needle on performance to stay on the short list of firm priorities.’ The ability to convert scale into stronger margins, organic growth, and a coherent exit narrative may become an important point of differentiation, potentially placing greater emphasis in LP due diligence on managers’ sector expertise, integration capabilities, and operating resources.  *Jayda Etienne is Deputy Editor of Preqin First Close.* *Second Look is edited by Libby Fennessy, Production Editor of Preqin First Close.* *It’s quick, free, and easy to subscribe *[*here*](https://www.preqin.com/firstclose)*.* * *The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to the above.