Several well-run local businesses can each have loyal customers and still struggle to hire a finance team, invest in technology, or serve a national account. Bringing them together can make those investments practical. The value of a roll-up lies in what the combined company can do that its individual businesses could not.
CapitalPad Research examines private equity roll-up statistics across acquisition activity, historical returns, revenue growth, and purchase prices. The report compares academic studies, transaction data, and disclosed company examples to understand where buy-and-build has created value and what the operating work involved.
U.S. buyout deals were add-ons
Q2 2025 · deal count · PitchBook, reported by Cherry Bekaert.1
Average buy-and-build deal IRR
Versus 23.1% for standalone buyouts · BCG/HHL historical sample, mostly European · exits 1998–2012.2
Median five-year revenue CAGR
European businesses with more than five add-ons · PwC/Gain.pro analysis published in 2025.4
Historical investment returns cited here come from third-party research and do not represent CapitalPad’s investment performance. Past performance does not guarantee future results. Private equity investments are illiquid and may result in partial or total loss of capital.
How buy-and-build creates value
A buy-and-build strategy combines a platform company with add-on acquisitions to expand its customers, locations, products, or capabilities. The platform may secure better purchasing terms, introduce services customers already need, or spread the cost of management and technology across more revenue. When those improvements increase earnings or make cash flow more dependable, they can support a more valuable business.
The platform is the operating foundation for that work. An add-on, also called a bolt-on, is a business acquired by the platform or its group. A good platform has the leadership, systems, and financial capacity to absorb acquisitions while continuing to serve its existing customers.
| Value driver | What improves in the business |
|---|---|
| Management depth | A stronger leadership team reduces reliance on individual owners and supports a larger organization. |
| Customer reach | New locations, sales channels, or complementary services allow the group to serve more of its customers’ needs. |
| Operating efficiency | Purchasing, scheduling, facilities, and shared administration can work more efficiently across the combined business. |
| Information and controls | Consistent reporting helps managers see margins, cash needs, customer retention, and performance by location. |
| Buyer appeal | A larger business with dependable earnings and a capable management team may appeal to a wider set of future buyers. |
Bain’s 2024 research examined buy-and-build deals made between 2010 and 2019. Deals with a strategic rationale for organic growth or margin improvement achieved 2.2x reported MOIC, compared with 1.4x for those dependent on multiple arbitrage alone.3
Buy-and-build returns by operating strategy
Reported MOIC for deals made in 2010–2019.
Source: Bain (2024). 44 deals; subgroup sizes and investor fee basis were not specified.3
Private equity add-on acquisition activity
Add-ons accounted for 75.9% of U.S. buyout deal count in Q2 2025, according to PitchBook data reported by Cherry Bekaert.1 That share shows how central acquisitions by existing portfolio companies have become to PE activity.
A high add-on share creates opportunities on both sides of a transaction. Platform owners can acquire complementary businesses; founders and smaller-company investors may have a pool of established platforms to consider as potential buyers. The relevant question is whether the business fits what those buyers are trying to build.
| Period | Reported statistic | Measure and source |
|---|---|---|
| Q2 2025 | 75.9% | Add-ons as a share of U.S. buyout deal count · PitchBook via Cherry Bekaert.1 |
| Full-year 2024 | 4,950 | U.S. smaller bolt-on acquisitions · PitchBook via NEPC.5 |
| Full-year 2025 | 4,509 | U.S. smaller bolt-on acquisitions · PitchBook via NEPC.5 |
Comparison: CapitalPad Research. The 75.9% figure is a share of transactions, not of capital invested, unique portfolio companies, or investors using the strategy. One platform can account for several add-on transactions. The annual counts retain NEPC’s “smaller bolt-on” description.
Annual bolt-on volume declined from 2024 to 2025 but remained above 4,500 transactions in the reported series.5 Add-ons continued to account for substantial activity even in a quieter acquisition year.
Add-on acquisitions in European private equity
PwC’s analysis of Gain.pro data found that 48% of European PE-backed assets carried out add-on acquisitions during 2019–2024. The share was 55% in the Nordic countries, 53% in France, 48% in the UK and Ireland, and 41% in Germany, Austria, and Switzerland.4
The European figure measures the share of portfolio companies making acquisitions; the U.S. figure measures add-ons as a share of buyout transactions. A single platform can complete several add-ons.
Buy-and-build returns versus standalone buyouts
Buy-and-build outperformed standalone buyouts on average in BCG and HHL Leipzig’s historical sample of exited deals. The 2016 study reported a 31.6% average deal IRR for buy-and-build and 23.1% for standalone investments, a gap of 8.5 percentage points. The deals exited in 1998–2012; roughly 90% were European, and none were U.S. companies. These are historical deal-level results, not net returns to an individual investor.2
Buy-and-build versus standalone buyout returns
Average deal IRR, exits in 1998–2012; approximately 90% European, with no U.S. deals.
Source: BCG/HHL (2016).2
The study also breaks down results by platform size, acquisition focus, and sponsor experience. These comparisons help identify which features of an operating plan deserve closer attention.
| Comparison | Configuration and average IRR | Comparison group and average IRR |
|---|---|---|
| Smaller platforms | Buy-and-build below $70M enterprise value: 52.4% | Standalone below $70M enterprise value: 20.3% |
| Larger platforms | Buy-and-build above $290M enterprise value: 12.5% | Standalone above $290M enterprise value: 16.2% |
| Acquisition focus | Add-ons deepening the existing industry focus: 43.5% | Add-ons diversifying into other industries: 16.4% |
| Number of add-ons | One or two add-ons: 35.5% | More than two add-ons: 19.9% |
| Sponsor experience | More than ten prior buy-and-build deals: 36.6% | Two or fewer prior buy-and-build deals: 27.3% |
Source: BCG/HHL, published 2016; deals exited 1998–2012.2 Platform-size bands are in USD enterprise value. Subgroups are drawn from a small, predominantly European sample selected for data availability. The averages identify historical associations; they do not establish an optimal acquisition count or an investable size cutoff.
Why the lower middle market fits the playbook
A smaller platform can have more room to add capabilities that larger businesses already possess. A finance function, professional sales management, or a broader service offering can change what the business is able to do. Acquisitions may also give it enough local density or product breadth to compete for customers it could not previously serve.
The study’s $70 million platform-size boundary is a historical research category. For a new investment, the more useful questions are which capabilities the company lacks and whether the team can build them.
The lower middle market private equity guide explains how management development, acquisitions, and greater scale can change a smaller business’s investment case.
Matching acquisition pace to integration capacity
In BCG/HHL’s historical sample, deals with one or two add-ons averaged a 35.5% IRR, compared with 19.9% for deals with more than two.2 The result does not isolate acquisition count as the cause. For a new platform, management experience, integration systems, and financing help determine a workable acquisition pace.
The practical test is whether previous acquisitions are delivering the expected results. If customer retention, reporting, cash conversion, or service quality are deteriorating, another closing may increase the workload before the platform is ready for it.
Revenue growth among companies making add-on acquisitions
Businesses with more than five add-on acquisitions recorded a median five-year revenue CAGR of 20.4%, compared with 7.6% for businesses with no add-ons, in PwC’s 2025 European market analysis using Gain.pro data.4 This measures total revenue growth, which can include acquired revenue; it is not an organic growth rate or a causal estimate.
Revenue growth by add-on acquisition activity
Median five-year revenue CAGR, including acquired revenue; European companies.
Source: PwC/Gain.pro (2025), p. 4.4
Revenue growth becomes more valuable when the company can retain customers, convert sales into cash, and earn a satisfactory return on the acquisition price. Acquiring a business immediately adds its sales to the group; improving the combined business requires additional work.
PwC’s revenue-growth comparison and BCG/HHL’s return comparison cover different companies and periods. They do not show whether the fastest-growing acquirers earned the highest returns. In an individual roll-up, acquisition prices, integration costs, financing, and exit proceeds determine how much of the business’s growth reaches investors.
Multiple arbitrage and the blended acquisition price
Multiple arbitrage is the opportunity to acquire earnings at one valuation multiple and eventually sell the combined business at a higher one. In a roll-up, add-ons can lower the blended purchase multiple if their earnings are acquired more cheaply than the platform’s. A subsequent increase in the group’s valuation multiple creates another potential source of value.
The higher exit multiple has to be supported by the business and the market. Buyers may value management depth, a more diverse customer base, dependable reporting, or greater scale. Simply placing several companies under one holding company does not establish those advantages.
Blended purchase multiple: a worked example
Consider the following hypothetical acquisitions. The platform produces $5 million of EBITDA and costs 5.5x EBITDA. Add-ons contribute another $5 million of EBITDA at a 3.5x purchase multiple. The combined purchase enterprise value is $45 million for $10 million of EBITDA, a blended 4.5x multiple.
| Acquisition | EBITDA | Purchase enterprise value |
|---|---|---|
| Platform at 5.5x EBITDA | $5.0M | $27.5M |
| Add-ons at 3.5x EBITDA | $5.0M | $17.5M |
| Combined at 4.5x EBITDA | $10.0M | $45.0M |
Calculation: ($5M × 5.5 + $5M × 3.5) ÷ ($5M + $5M) = 4.5x. This isolates acquisition pricing before debt, transaction fees, integration costs, taxes, working-capital adjustments, or changes in earnings. It is not a return forecast.
Enterprise value at different exit multiples
Illustration: $10M of EBITDA held constant. Enterprise value before debt and other equity-value adjustments.
The example shows the attraction of combining sensible purchase prices with a business that can support a higher valuation. It also shows why the operating plan matters: if earnings weaken or the market will not pay the assumed multiple, the exit value changes. Growth and improved cash generation can contribute value even without a higher multiple.
Add-on versus platform acquisition multiples
GF Data reported that add-ons with $1 million to $10 million of enterprise value averaged 5.7x EBITDA in the first three quarters of 2024, while platforms in the same size band averaged 4.5x.6 In that sample, demand for add-ons supported higher prices.
This is a comparison within the same size band. It does not establish that those add-ons cost more than the much larger platforms buying them. The relevant investment calculation is the actual blended cost of the group’s earnings, together with the cost of integration and the value of the capabilities acquired. The lower middle market EBITDA multiples guide compares add-on and platform pricing by transaction size.
Roll-up examples by industry
Insurance brokerage, veterinary services, home services, and pest control illustrate different ways to build value through acquisitions. Their common attraction is a base of operating businesses with customer relationships and opportunities to share resources. The operating model varies: some functions benefit from centralization, while others work best close to the customer.
| Business and sector | Reported evidence | What the sponsor built |
|---|---|---|
| AssuredPartners Insurance brokerage | 124 acquisitions and more than doubled revenue and EBITDA during Apax VIII’s ownership, reported February 2019.7 | A broader brokerage supported by investment in technology, sales, infrastructure, and senior leadership. |
| American Veterinary Group Veterinary services | More than 40 acquisitions; nearly 50 practices and urgent-care clinics. Latticework reported 6.5x MOIC and 82% IRR on its April 2021 sale.8 | Management and administrative infrastructure supporting veterinary partners and expansion into urgent care. |
| Apex Service Partners HVAC, plumbing, and electrical services | More than 8,000 employees and a $3.4B continuation transaction announced in October 2023.9 | A network of local service brands sharing resources, management expertise, and talent development. |
Selection and presentation: CapitalPad Research. Sources: Apax, Latticework, and Alpine disclosures.7, 8, 9 Latticework’s figures are sponsor-reported investment outcomes; the release does not specify a net LP basis. Apex’s $3.4B is the disclosed continuation-transaction amount, not a return multiple or an enterprise-value comparison.
Central support and local operating decisions
In veterinary services, Latticework described an approach that allowed clinical partners to focus on patients while the group supplied administrative support.8 That is a useful example of the division of responsibility a platform can create. Central support is valuable when it helps the local business do its job better.
EQT’s Anticimex case study describes another approach. Add-ons along existing pest-control routes increase customer density and efficiency, while branch-level decision-making keeps the company close to customers. The group also developed remote-monitoring technology that changes how the service is delivered.10 The investment case combines acquisitions with operating and product improvements.
For an investor evaluating a platform, or an owner considering a sale to one, the important questions are concrete: which resources will improve, which decisions stay local, and how will service quality be maintained? Those answers say more about the next stage of the business than acquisition count alone.
The disclosed cases illustrate operating approaches, rather than a representative return for the strategy. Enterprise-value growth can also reflect additional acquisitions, new capital, and borrowing; an investor’s equity return requires the underlying cash flows.
Financing add-on acquisitions and integration
A buy-and-build plan needs capital for the acquisitions and for the work that follows them. Financing can include new equity, seller rollover, acquisition facilities, and borrowing supported by the existing group. A platform’s established lender relationships may make an add-on easier to finance than a new standalone business.
| Capital source | All deals in the size band | Platform-only deals |
|---|---|---|
| Senior debt | 66.7% | 31.8% |
| Subordinated debt | 13.7% | 6.8% |
| Equity | 19.6% | 61.4% |
Source: GF Data, reported by its managing director in ACG’s Middle Market Growth, January 2025.6 The all-deal financing profile reflects the acquiring entity and is heavily influenced by add-ons. The columns are not an add-on-only versus platform-only comparison and should not be treated as recommended capital structures.
CapitalPad invests $1 million to $2.5 million of equity per independent sponsor transaction, including buy-and-build acquisitions in the lower middle market. CapitalPad participates as a minority equity partner in U.S. and Canadian businesses. Sponsors can review CapitalPad’s investment criteria.13
Debt service and integration spending both draw on company cash flow. A platform needs funding for the purchase and enough financial capacity afterward to improve the acquired business while meeting its loan obligations.
A credible plan includes the cost of systems, management hiring, retention, facilities, and working capital. It also shows how the business can continue operating if the next acquisition takes longer to close or an expected improvement arrives late.
What a roll-up integration plan needs to cover
Buy-and-build execution requires a repeatable process for making acquired businesses work better together. The operating plan should identify what will change, who is responsible, how much it will cost, and how progress will be measured.
A platform may standardize financial reporting before changing customer-facing systems. It may centralize purchasing while retaining local brands and service teams. The right sequence depends on how the business earns its customers’ trust and where the improvements are available.
| Part of the plan | Evidence that makes it credible |
|---|---|
| Acquisition fit | A clear reason for each target: customer access, geography, capability, or operating efficiency. |
| Integration leadership | Named people with time, authority, and relevant experience to carry out the work. |
| Earnings quality | A bridge from reported EBITDA to sustainable cash earnings after necessary investment. |
| Operating measurement | Tracking of customer retention, service quality, margins, cash conversion, and results by acquired business. |
| Acquisition pacing | A process for checking earlier integrations before adding more complexity. |
| Exit readiness | A coherent business, credible reporting, and a management team that a future owner can rely on. |
Execution risk and regulatory scrutiny
The research reviewed here does not establish a representative failure rate for private equity roll-ups. The Opus Connect discussion concerns missed synergy forecasts, rather than a measured rate of business failures or losses of investor capital, and its public summary does not provide a reproducible dataset.11 For a particular investment, the more useful evidence is how earlier acquisitions performed against their operating plans.
Competition and sector requirements also belong in the acquisition plan. In May 2024, the FTC and DOJ launched an inquiry into serial acquisitions and roll-up strategies.12 That is historical regulatory context, not a claim that every roll-up is problematic. The strategy should be built around better service, capabilities, and efficiency, with transaction-specific legal review where needed.
The holding period must accommodate the work
Acquiring the businesses, integrating them, and demonstrating improved performance can take years. A plan that depends on a quick exit may leave little room for delays or a weak sale market, and a longer hold changes liquidity and annualized returns. Private equity holding period data shows how exit timelines have lengthened.
How accredited investors can invest in buy-and-build strategies
Accredited investors can participate in buy-and-build strategies through private equity funds or individual co-investments in companies pursuing an acquisition plan. A fund delegates company selection to the manager. A deal-by-deal approach allows the investor to examine a particular platform, sponsor, and set of investment terms.
CapitalPad is a private equity co-investment group through which accredited investors can invest in lower middle market private equity, including buy-and-build platforms (roll-ups). CapitalPad invests as a minority equity partner in independent sponsor transactions.13
When evaluating an independent sponsor deal, separate the platform’s existing earnings from the growth expected through future acquisitions. The sponsor’s plan should also account for integration staff, systems, financing, and the proceeds available to investors after those costs.
Private equity roll-up statistics: common questions
What percentage of private equity buyouts are add-ons?
Add-ons represented 75.9% of U.S. buyout deal count in Q2 2025, according to PitchBook data reported by Cherry Bekaert.1 This is a transaction-count share. It does not mean that 75.9% of invested capital or unique portfolio companies were in roll-ups.
Do buy-and-build investments outperform standalone buyouts?
BCG and HHL Leipzig reported average deal IRRs of 31.6% for buy-and-build and 23.1% for standalone investments in a 121-deal sample exited between 1998 and 2012.2 The sample was predominantly European and excluded U.S. companies. It supports historical outperformance in that sample, not a guaranteed or current market-wide return advantage.
Does completing more acquisitions produce better returns?
Not necessarily. In BCG/HHL’s historical return sample, deals with one or two add-ons averaged a 35.5% IRR, compared with 19.9% for deals with more than two.2 PwC’s separate European analysis found median five-year revenue growth of 20.4% among companies with more than five add-ons, including acquired revenue.4 Revenue growth and investor returns measure different outcomes; neither study establishes an optimal acquisition count.
What is multiple arbitrage in a roll-up?
Multiple arbitrage is the potential gain from acquiring earnings at a lower valuation multiple than the combined business commands at exit. Cheaper add-ons can reduce the blended purchase multiple. The exit valuation still depends on earnings quality, business capabilities, and market conditions; greater size alone does not guarantee an uplift.
Which industries are suited to buy-and-build?
Industries with many established operators, repeat customer demand, and useful shared capabilities can support buy-and-build strategies. Insurance brokerage, veterinary services, home services, and pest control provide documented examples.7, 8, 9, 10 Fragmentation creates potential acquisition supply; the operating case determines which combinations are worthwhile.
What is the failure rate for private equity roll-ups?
The sources reviewed here do not establish a representative market-wide failure rate. Missed synergy targets, investor losses, and insolvency are different outcomes. A statistic about one should not be presented as a failure rate for all roll-ups.11
How can accredited investors invest in roll-up platforms?
Through private equity funds that pursue buy-and-build strategies, or deal by deal through co-investments in a specific platform. CapitalPad gives accredited investors deal-by-deal access to lower middle market acquisitions led by independent sponsors, including buy-and-build platforms. Investors review each company’s acquisition plan, financing, and offering terms before deciding whether to participate.13
Sources and methodology
CapitalPad Research compiled this report’s private equity roll-up comparisons, tables, and charts from PitchBook, BCG/HHL, Bain, PwC’s analysis of Gain.pro data, and GF Data. Sponsor and company disclosures supply the named operating examples.
| Observation periods | Q2 2025 and full-years 2024 and 2025 for U.S. deal activity; 1998–2012 exits for BCG/HHL returns; 2010–2019 deal dates for Bain’s strategic-rationale comparison; PwC’s 2025 publication for European growth analysis; first three quarters of 2024 for GF Data financing and pricing. |
|---|---|
| Market focus | Private equity buy-and-build investing, including lower middle market companies. The evidence includes U.S. transaction data, European performance and growth studies, and individual company examples. |
How the performance studies are used
BCG/HHL provides historical deal-level evidence. The 2016 report begins with 9,548 exited deals, uses 2,372 for its broader activity analysis, and narrows to 121 with sufficient data for return analysis. Of the 121, 48 involved add-ons; approximately 90% were European, and none were U.S. companies. All were exited between 1998 and 2012. The configuration results are subgroup averages within that return sample.2
Bain reports investment multiples, BCG/HHL reports deal IRRs, and PwC reports revenue growth. These studies use different samples; their results cannot be combined into a return forecast. The observational data does not establish that acquisition count or platform size caused a particular outcome.2, 3, 4
BCG/HHL includes investments with one or two add-ons; Bain’s 2024 article defines buy-and-build around at least four repeated add-ons. PwC distinguishes staged buy-and-build from faster roll-ups. The studies therefore cover different acquisition strategies.2, 3, 4
Market data and company examples
- Deal activity
- Cherry Bekaert and NEPC report PitchBook data. The quarterly U.S. transaction share and annual smaller bolt-on counts are kept separate. PwC’s European adoption measure counts assets that carried out acquisitions, not the number of add-on transactions.1, 4, 5
- Growth observations
- The revenue chart uses the no-add-on and more-than-five-add-on endpoints published by PwC. It does not imply organic growth or a matched comparison with the BCG/HHL return sample. The source’s middle buckets are not redrawn because their printed ranges overlap at three add-ons.4
- Pricing and financing
- GF Data’s figures are reported by its managing director in ACG’s publication. The financing comparison is all deals versus platform-only deals in the $1M–$10M enterprise-value band; it does not provide an isolated add-on financing average.6
- Company examples
- Apax, Latticework, Alpine, and EQT describe their own investments. Their disclosed operating results and transaction details illustrate how platforms developed. They are selected cases, not representative industry-return data.7, 8, 9, 10
- Execution and regulatory context
- The Opus Connect discussion provides practitioner context on missed synergies; its public summary does not provide a reproducible failure-rate dataset. The FTC/DOJ reference records the 2024 inquiry, not a statement about present reporting thresholds or the legality of a particular acquisition.11, 12
Cite this research
This CapitalPad Research report examines private equity roll-up activity and the evidence on buy-and-build investment performance. The report compares published return studies, add-on acquisition trends, revenue growth, and platform-versus-add-on pricing to explain the investment case for roll-ups and the risks that can undermine it.
When using information from this report, cite CapitalPad Research and link to this page.
CapitalPad Research, “Private Equity Roll-Up Statistics: The Case for Buy-and-Build.” Updated October 9, 2026.
Sources & references
- PitchBook Q2 2025 U.S. PE data, reported by Cherry Bekaert, “Private Equity Mid-Year Trends in 2025.” Source
- BCG & HHL Leipzig Graduate School of Management, “The Power of Buy and Build” (2016). Source (PDF)
- Bain & Company, “Building a Stronger Buy-and-Build,” Global Private Equity Report 2024. Source
- PwC, “Unlocking Value with Buy-and-Build Strategies in the DACH Private Equity Market” (March 2025). Gainpro data. Source (PDF)
- PitchBook bolt-on data, reported by NEPC, Quarterly Private Markets Report Q4 2025. Source
- GF Data, reported by Middle Market Growth (ACG), “Small Deals Big Factor in Middle-Market Private Equity in 2024” (January 2025). Source
- Apax Partners, “Apax VIII Sells Its Stake in AssuredPartners to GTCR” (2019). Source
- Latticework Capital Management, “Latticework Sells American Veterinary Group.” Source
- Alpine Investors / Business Wire, “$3.4 Billion Single-Asset Continuation Transaction” (October 2023). Source
- EQT Group, “How EQT Took Anticimex from Nordic Player to Global Pest Control Giant” (accessed September 13, 2026). Source
- Opus Connect, “Roll-Up or Roll-Over? A Seasoned Leader’s Insights” (May 27, 2025). Source
- Federal Trade Commission, “FTC and DOJ Seek Info on Serial Acquisitions, Roll-Up Strategies” (May 2024). Source
- CapitalPad, “Official Information About CapitalPad: Private Equity Co-Investment Group” (accessed September 13, 2026). Source
