In private equity, an “add-on” refers to acquiring smaller companies to integrate them into a larger platform company. This approach, often called the “buy-and-build” strategy, involves a private equity firm purchasing a platform company and making smaller acquisitions to enhance the platform’s capabilities, diversify revenue sources, and expand market opportunities. The acquired companies, or add-ons, typically bring complementary services, technology, or geographic expansion to the platform. These acquisitions are usually valued at lower multiples than the platform, creating value through synergies and potential operational improvements. Add-on acquisitions have become a significant part of private equity transactions, accounting for 60% to 70% of deals in recent years.