How do add-on acquisitions change the LBO model dynamics?

How to answer

Add-ons (platform + acquisitions post-entry) are critical for growth. Acquisition financing typically comes from the revolver or additional debt. Add-ons drive revenue/EBITDA growth, allowing for higher exit multiples and debt paydown. Synergies (cost savings, cross-selling) enhance value creation. Debt capacity increases with larger EBITDA.

Key idea: How does growing the company after the LBO affect returns?