Add-On Acquisition

A relatively small acquisition made by a private equity portfolio company to complement and enhance its existing operations, typically adding new products, customers, geographies, or capabilities. Bolt-on acquisitions are a core component of buy-and-build strategies and are usually integrated into the platform company rather than operated independently.

A business combination achieved in stages, where the acquirer held a previously existing equity interest in the acquiree before obtaining control. Under IFRS 3 and ASC 805, the acquirer must remeasure its previously held equity interest at fair value at the acquisition date and recognise any resulting gain or loss in profit or loss.

The total cost of acquiring a new customer, including marketing, sales, and onboarding expenses. Optimising the ratio of customer lifetime value to CAC (LTV:CAC) is a central challenge for growth businesses and a key metric scrutinised by investors.

The required accounting method for business combinations under IFRS 3 and ASC 805, which involves identifying the acquirer, determining the acquisition date, recognising and measuring the identifiable assets acquired and liabilities assumed at fair value, and recognising goodwill or a gain from a bargain purchase. The acquisition method replaced the previously permitted pooling of interests method and ensures that all identifiable intangible assets are separately recognised at fair value on the acquirer's balance sheet.

The initial acquisition made by a private equity fund in a particular sector or sub-sector, intended to serve as the foundation for a buy-and-build strategy through subsequent add-on acquisitions. Platform companies are typically larger, more established businesses with strong management teams, scalable infrastructure, and a proven operating model.

A private equity value creation approach in which a fund acquires a platform company and subsequently makes multiple add-on acquisitions to accelerate growth, expand market share, and create a business of greater scale and value than the sum of its parts. The strategy generates returns through operational improvement of the platform, multiple arbitrage (acquiring at lower multiples than the eventual exit multiple), and synergy realisation from integration.

A direct investment made by a limited partner alongside a private equity or venture capital fund in a specific portfolio company. Co-investments allow LPs to increase exposure to particular deals, typically at reduced or no management fees and carry, while giving the GP additional capital for larger transactions.

A private equity transaction in which two or more PE firms jointly acquire a target company, sharing the equity investment, risk, and governance responsibilities. Club deals enable firms to pursue larger transactions than they could finance individually and provide portfolio diversification benefits.