Private Equity Portfolios Turning to Acquisitions

According to recent research and statistics, private equity portfolios are becoming more acquisitive, with add-on deals now making up a significant portion of all transactions.

According to PitchBook research, private equity firms are steadily increasing their utilization of add-ons as a source of growth. In the building material industry alone, add-on deals made up a third of the total deal flow in the first quarter of 2010. This was a steady jump from the fourth quarter of last year, when the number was closer to 22%.

In fact, acquisitions have nearly matched a four-year high, a mark set in the 3rd quarter of 2007. After 2007, add-ons saw a steady decline throughout 2008 and 2009. The first quarter numbers this year mark a significant change, showing excellent recovery and boding well for the remainder of 2010.