The numbers.
Bain’s 2025 mid-year report put add-on acquisitions at more than 75% of total buyout activity.[1] Goodwin tracked the same trend reaching 76%+ by end of 2022 and holding the line through 2024.[2] In the lower middle market — companies under roughly $25M of EBITDA — Cherry Bekaert estimates roll-ups make up over 80% of deal volume.[3]
A decade ago, add-ons were a value-creation lever sitting alongside operational improvements and multiple expansion. Today they are the deployment strategy.
Why the shift happened.
There are four structural forces, each pulling in the same direction:
One — deployment pressure.
With record uninvested capital sitting in fund accounts and a meaningful share aged four years or more, GPs need to put money to work before the fund clock runs out. Add-ons deploy committed capital incrementally without underwriting a new management team or a new investment thesis. They are the path of least resistance.
Two — multiple arbitrage.
Median entry multiples on new platforms have compressed to 11.7x EBITDA on a rolling 15-month basis, down from a 12.6x peak in 2021 but still historically rich.[4] Meanwhile, smaller targets in the $25M–$100M EV range typically transact at 6–8x EBITDA.[5] Buy a $20M revenue business at 7x and roll it into a platform that trades at 11x and the math, in isolation, just works. That gap doesn’t require operating genius. It requires sourcing and execution.
Three — financing structure.
Add-ons are often financed off existing credit facilities — including pre-arranged delayed-draw features — rather than fresh debt rounds. That eliminates new lender diligence, removes a rate-cycle dependency, and keeps platform leverage profiles within already-negotiated covenants. In a tighter credit environment, the “just use the facility” tool is structurally attractive.
Four — the supply of sellers.
The fragmented end of the market — specialty services, niche industrials, regional healthcare practices, professional services — is full of founder-owned businesses approaching transition. Many of these owners aren’t running formal sale processes; they are open to the right conversation. Banker-led auctions miss most of them. That is where direct sourcing earns its return.
What it means for sourcing.
The strategic implication is straightforward: if 75% of your deal activity is going to be bolt-ons, then the throughput of your add-on sourcing function becomes the limit on your deployment pace. Not your conviction. Not your diligence team. Not your debt capacity. Sourcing.
Most platforms still source add-ons the way they sourced their first platform — a corp-dev lead, a watchlist of 50–200 known names, a banker on retainer, an inbound from a sell-side advisor. That works when add-ons are a side dish. It does not work when add-ons are the meal.
The platforms pulling ahead in 2026 are the ones treating add-on sourcing as a systems problem rather than a relationship problem — covering the entire viable target universe in a sector, identifying transition signals at scale, and producing warm conversations on a calendar instead of by accident. The 75% number is not the ceiling. It is the floor.
Sources & further reading
- Bain & Company / ABF Journal, December 2025 — add-on acquisitions exceed 75% of total buyout activity.
- Goodwin Procter, Use of Add-On Acquisitions in PE Is Likely to Continue, May 2024 — add-ons reached 76%+ of PE-backed buyouts by end of 2022, holding the line through 2024.
- Cherry Bekaert, Private Equity Report: 2024 Trends & 2025 Outlook, February 2025 — in the lower middle market, roll-ups account for over 80% of deal volume.
- Bain & Company / ABF Journal, December 2025 — median entry multiples have compressed to 11.7x EBITDA on a rolling 15-month basis, down from a 2021 peak of 12.6x.
- Pipelineroad analysis of GF Data, 2024–2025 — multiples in the $25M–$100M EV range typically run 6–8x EBITDA, materially below upper-mid and large-cap pricing.
