How are you underwriting add-on multiples in lower middle market deals right now?
Curious how people here are thinking about add-on acquisitions in the lower middle market at the moment.
Platform deals in the LMM seem to be clearing at noticeably higher multiples than a couple of years ago, while tuck-ins are still often priced at a meaningful discount. For those of you on the buy side or working with searchers and independent sponsors: are you still underwriting a multiple-arbitrage story on add-ons, or have you moved to a more conservative base case where the value comes from synergies and operations?
Also interested in how much you haircut seller-provided add-back schedules at this size. Any rules of thumb, or war stories, welcome.
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