PE Relies on "Bolt-On" Growth
According to Pitchbook, more than half of the private equity deals in Q1 2012 were add-on acquisitions to existing portfolio companies. This may suggest that the PE companies are relying ever more heavily on acquisitions to grow their platform companies…perhaps finding organic growth more challenging in the current economic environment.
In any event, the trend has been continuing for some time, and seems unlikely to abate anytime soon. It also suggests that timing one’s sale is even more critical than ever, as the opportunity to “bolt-on” to existing private equity platform companies offers the chance for a more lucrative exit.
A professional adviser can help business owners navigate these waters effectively. Knowing how and when to exit is a critical decision process that shouldn’t be taken lightly.