From large-cap to add-on
A decade ago the European private equity model was clear: buy a large company, leverage it, optimise it operationally and sell it four or five years later on multiple expansion. That model still exists, but it is no longer the dominant one.
Add-on acquisitions today account for more than 75% of total global buyout activity. The dominant model has become a different one: buy a mid-sized platform and build it out, adding five, ten or fifteen acquisitions over the holding period. Each add-on contributes aggregate EBITDA, market share and bargaining power with customers and suppliers. The exit is no longer designed around the company that was bought: it is designed around a company several times larger, built over 3–7 years.
Spain reflects this dynamic clearly. The private equity segment closed 2025 with 430 transactions and an aggregate value of €33.676bn, representing a 16.5% increase in value over the prior year despite an 8.5% fall in deal count. The same paradox as the market as a whole, but more pronounced in PE: fewer deals, more value per deal. And a growing proportion of those deals are add-ons to platforms the fund already holds in its portfolio.
Why it works now
The appeal of buy-and-build in the current cycle is mathematically intuitive, and to understand it, it helps to contrast it with the previous cycle.
In the zero-rate environment, private equity generated returns through multiple arbitrage. It bought at 8x EBITDA, sold at 10x, and the difference, leveraged with debt at 3%–4%, produced the fund’s target IRR. The deal worked even with a flat business: if the exit multiple was higher than the entry multiple, the return arrived.
With debt today between 5.5% and 7% and banks limiting leverage, that arbitrage is no longer enough. The return has to come from real expansion of the business. And this is where buy-and-build solves the problem. A platform trading at 6x EBITDA absorbs a competitor at 4x, integrates costs, shares customers and lifts aggregate EBITDA. The exit multiple may not expand — it may even compress — and still generate a superior return, because the numerator has grown faster than the denominator. The logic of multiple arbitrage replaced by the logic of operational aggregation.
On top of this comes a structural factor: in fragmented markets — which abound in Spain — consolidating creates real competitive advantage, not just financial advantage. Margin, purchasing power, capacity for technology investment and the ability to retain talent all improve with scale. The consolidated platform is not just bigger: it is a better company.
“The most likely buyer in 2026 for a well-positioned family business in a fragmented sector is no longer the strategic competitor. It is a fund that needs that asset to complete a platform.”
Where buy-and-build dominates in Spain
Five major verticals concentrate much of today’s add-on activity in Spain. Vertical software with proprietary data and low churn. Healthcare services: dental, ophthalmology and dermatology clinics, laboratories. Premium food and beverage with internationalisation potential. Specialised industrial services — maintenance, engineering, energy efficiency. And B2B professional services: advisory, technology consulting, corporate training. The list is not closed, and the pattern repeats across many other verticals with the same structural logic.
That logic is fragmentation. When the top quartile of the sector represents 30% of the market and the rest is split among hundreds of small and mid-sized operators, the opportunity for the fund is direct: there are natural platforms — regional leaders, operators with a brand or technology — and there is a pipeline of available add-ons behind each platform. The fund enters by buying the platform and, in parallel, has already mapped the ten or twelve candidates to integrate over the following two or three years.
The pressure of dry powder
What makes this dynamic especially intense in 2026 is the combination of accumulated capital with its ageing. Global buyout dry powder stands at around $1.7 trillion at the end of 2025, with more favourable financing conditions than in the past two years and a growing inventory of assets pending exit. Funds are under pressure to deploy capital.
There is also one figure worth underlining: 24% of global dry powder has now gone four years or more without being invested, up from 20% in 2022. A quarter of the capital committed by institutional investors has been sitting idle for a significant period. For managers, that means the fund clock is ticking, distributions to LPs are being delayed, and the conversation with those LPs in the next fundraising round becomes uncomfortable.
For the Spanish mid-market seller, that pressure translates into something tangible: more competitive processes, a wider universe of active financial buyers, shorter decision timelines on well-prepared deals, and greater willingness to accept structures that facilitate closing. The company that comes to market with audited figures and a clear strategic narrative benefits directly from that urgency.
Implications for the family business
Three operational takeaways for anyone considering a transaction over a twelve- to twenty-four-month horizon.
The most likely buyer is no longer strategic. In fragmented sectors, the probability that the best offer comes from a fund seeking to consolidate now exceeds that of the strategic competitor. And what the fund values — revenue recurrence, defensible margins, scalability, a management team independent of the founder, well-ordered information systems — does not always match what a strategic buyer values. Preparing the company for one or the other requires different decisions, and it is best to take them with time to spare.
Rollover equity is the key lever for sharing in the upside. Selling 70% to 80% to the fund and reinvesting the rest in the new vehicle allows you to monetise partially, keep exposure to the aggregate growth of the buy-and-build and, in many cases, multiply the value of the retained stake at the fund’s exit five years later. Well structured, the rollover can end up being the most profitable part of the deal, because the valuation is applied to a company very different from the one the founder originally sold.
A platform and an add-on are not the same. If the company is large enough to be a platform — EBITDA typically above €5–8 million, a professionalised team, a consolidatable sector — the process is one thing: a competitive auction among funds, a premium valuation, a structure with W&I and limited earn-outs. If the company fits as an add-on to an already-built platform, the process is something completely different: identifying the active platforms in the sector, positioning against one or two natural buyers, a valuation conditioned by the specific synergy it brings to that particular platform. Confusing one for the other at the start of the process is probably the most expensive mistake you can make.
What this means for those selling in 2026
The conclusion for a family entrepreneur considering exiting their capital in the medium term is that the private equity cycle, far from being an obstacle, is precisely the opportunity. There is capital, there is pressure to deploy it, there are fragmented sectors where the consolidation logic is clear, and there are financial buyers with an active thesis in the Spanish mid-market.
The difference between closing well and closing only adequately in this cycle is not set by the market moment: it is set by the fit between the asset’s profile and the buyer’s profile. A company that presents itself as a platform when it fits as an add-on reaches the wrong universe of funds and signs a valuation that does not reflect what the asset is worth. And the reverse happens too: companies with a platform profile that position themselves as an add-on and leave the control premium they were due on the table.
Identifying which funds have an active thesis in the asset’s specific sector, understanding what each one is looking for — not all of them buy the same profile or with the same structure — and building the equity story accordingly is the work that separates a deal signed at the sector’s average price from a deal signed at the price the asset is really worth in the current cycle. That work is done before the data room opens.
