Platform businesses have always been a key investment focus for
private equity and a proven strategy to grow a business, but as the
cost of capital and economic headwinds have increased over the
years, so has the importance of this strategy. Over the past 10
years, add-on acquisitions have gone from about half of PE deal
volume to over two-thirds in 2024.
Platforms provide a base for scaling quickly, purchasing
complementary businesses, via tuck-ins or bolt-ons, and integrating
them into an existing platform business. These acquisitions are
usually aligned with the platform's strategy, enhancing its
capabilities, market presence, or operational efficiency.
By building a robust platform business with ability to
seamlessly bring acquisitions on board, PEs and platform businesses
can significantly increase their valuation over time through
strategic positioning, revenue synergies, and operational
improvements.
