An add-on acquisition model for a PE platform: accretion, synergies and pro forma leverage, run from the data room

A sponsor bought Ironvale Digital Infrastructure (Project Voltaic), a 220 MW data center platform, on December 31, 2026. A year later it can buy Project Lariat: one 24 MW colocation campus in Carrollton, Texas, 16 miles from Voltaic’s DFW I campus, with 19.2 MW leased and $15.1 million of LTM adjusted EBITDA, for $226.5 million, 15.0x. The data room has no bolt-on, so Lariat’s financials and price are an illustrative spec, sized against DFW I, the six campus appraisals and the rate card.

An add-on (or bolt-on, or tuck-in) acquisition is a smaller company bought by a private equity platform, and buy and build is the strategy of growing a platform that way. Accretion/dilution analysis asks whether a deal raises or lowers the buyer’s earnings per share. A private platform has no EPS, so this model runs the same test on EBITDA, leverage, cash flow and equity value per unit. The model found five things:

• Lariat is cheap against the platform’s own assets. $9.44 million per MW and an 8.96% cap rate, against a $17.50 million median and 6.17% for Voltaic’s six appraised campuses and $19.79 million for a 2025 sale in Carrollton. The discount is what Lariat’s cost structure earns, and a seller holding that comparable will argue it.
• Synergies are $5.9 million at run-rate, 39% of LTM EBITDA, and $4.1 million of it is G&A. Most of the power saving goes to tenants: wholesale leases pass power through at cost, so only the bundled colocation contracts keep it.
• The delayed-draw term loan cannot pay for it. Its purpose is growth capex at the platform’s own campuses, and the platform drew all of it in 2027.
• The ratio prong is already shut. Development draws took first-lien net leverage from 4.76x at close to 5.00x, so the add-on uses the free-and-clear basket that the 2028 build program also needs.
• Half debt, half equity is accretive with room to spare. Leverage goes to 5.13x, value per unit rises in every case, and the add-on equity makes 49.6% to 2030 on the deal team’s synergy case and 26.3% with no synergies at all.

The target against the platform’s own campuses

On the platform’s own yardsticks, 15.0x buys Lariat at about half the value per MW of Voltaic’s appraised campuses. Its unit economics explain most of the gap: lower NOI per MW, power it pays for itself and standalone G&A of 13% of revenue.

The spec holds together. Lease revenue rebuilds from MW times rate to the $34.7 million in the P&L, power at cost rebuilds from load, PUE and utility rate to $10.2 million, and the wholesale rate is the bottom of the rate card’s Dallas band. What Lariat lacks is what the platform’s 18.0x pays for:

• Its NOI margin before power reimbursements is 56%, against 72% at DFW I. Its 29 colocation tenants pay an all-in $185 per kW a month with power bundled in, so Lariat carries 10.2 MW of power cost at a utility rate 21% above DFW I’s $0.0503 per kWh and a PUE of 1.42.
• Cross-connect revenue is $57 thousand per leased MW against DFW I’s $126 thousand. Lariat has fewer carriers in its meet-me room; DFW I sits on the Dallas metro fibre ring.
• There is no pipeline. One campus at 80% occupancy, with no land bank or powered expansion, against a platform planning 550 MW by 2030.

Lariat’s price per MW sits below every campus the platform owns and below the only local comparable sale.

The appraisals cut the other way too. The DFW I appraisal records a 2025 sale in Carrollton at $19.79 million per MW and a 5.80% cap rate, and a seller with that comparable will price Lariat on NOI, not on EBITDA after its own G&A. 15.0x is a price for Lariat’s cost structure, not for its real estate. The returns grid in the last section prices the deal up to 17.0x.

The synergy case, built line by line

Built line by line, synergies are $5.9 million at run-rate: $4.1 million of G&A, $0.95 million of power, $0.57 million of site contracts and $0.26 million of interconnection. With cross-sell they reach $3.2 million in 2028, $6.8 million in 2029 and $7.7 million in 2030, against $4.4 million of costs to achieve.

How each line is built:

• G&A: roles removed times cost per role, less what the platform adds. The three executives, six finance and billing roles and four sales roles go, with Lariat’s standalone audit, legal, IT, office, insurance and other lines: $5.2 million across 13 roles and six cost lines. The platform adds back $44.8 thousand per MW of Voltaic’s own G&A cost (2.06, tab 7) for the work it takes on, $1.1 million on Lariat’s 24 MW. The headcounts are assumed, since the spec gives only dollar lines. G&A is 70% of the run-rate, so it is the line to diligence hardest.
• Power: Lariat’s MWh times the rate gap to DFW I’s contract, less the wholesale share. Lariat uses 167,183 MWh (167.2 GWh) a year. Moving it onto DFW I’s TXU supply and ERCOT 4CP program (6.01, 6.02) closes a $10.72 per MWh gap to DFW I’s effective rate (3.07), a 17.6% cut and $1.79 million a year. But Lariat’s two wholesale leases, like Voltaic’s own, pass metered power through at cost (4.04, section 4), so the 78,367 MWh on those leases hand $0.84 million to the tenants. Only the bundled colocation contracts keep their saving: $0.95 million. The TXU contract runs through 2028, so the saving from 2029 assumes a renewal on similar terms.
• Interconnection: ties per tenant times the price, less the route lease. Two diverse dark-fibre ties per tenant, 62 in all, link Lariat’s tenants to DFW I’s meet-me room over the Dallas metro ring (12.02) at the rate card’s $425 a month plus 30% for a diverse path (4.04), $6,630 a tie a year; less a $0.15 million route lease. That lifts Lariat’s cross-connect revenue from $57 thousand to $79 thousand per leased MW, against DFW I’s $126 thousand.
• Cross-sell: pipeline MW times rent times probability. DFW I is 97% leased in the plan from 2027 (2.06, tab 4), so the 2.4 MW Dallas pipeline (4.03) goes to Lariat’s vacant space. At the rate card’s $122 per kW a month that is $3.5 million of rent; at the pipeline’s 25% weighted probability and 90% flow-through, each year’s cohort adds $0.79 million of EBITDA, $1.7 million by 2030. It is uncontracted, so it stays out of the run-rate and out of covenant EBITDA.
• Site service contracts: each contract times a saving rate. Maintenance at 15%, security at 10% and other site contracts at 5% as they move onto Voltaic’s fleet agreements (9.05); site staff stay.

Phase-in. Nothing is earned in 2027, because the add-on closes on December 31. The model takes half the run-rate in 2028 and all of it from 2029: the platform contracts Lariat joins renew or end within 2028 (the Caterpillar fleet service in December 2027, the ERP licence in January 2028, the Vertiv service in June 2028), and three-quarters of the severance and migration cost falls in 2028. Costs to achieve are $2.4 million of opex and $2.0 million of capex, 0.79x the run-rate cost synergies, so net synergies are slightly negative in 2028 ($0.7 million) and $6.2 million in 2029.

Before costs to achieve, standalone growth adds $3.6 million of EBITDA by 2030 and synergies $7.7 million.

Funding: what the credit documents allow

The obvious sources are closed. The delayed-draw term loan is spent and restricted to growth capex, and the ratio prong has $22.4 million of room. The add-on runs on the staple’s free-and-clear basket, which the 2028 build program also needs.

Three funding cases, each tested against the documents:

• The delayed-draw term loan cannot fund it. The staple restricts its $250 million to growth capex for new capacity at the platform’s campuses and on land the borrower owns (11.10, page 2). An acquisition price is neither, and the model draws all of it in 2027 for PHX II and ATL II.
• The ratio prong is nearly shut. Unlimited incremental debt is allowed while pro forma first-lien net leverage stays at the closing level. At close that was 4.76x; by December 2027, with the delayed draw and $50 million of revolver funding development capex, net debt is $1,580 million and leverage 5.00x. The prong has $22.4 million of room.
• The free-and-clear basket carries the deal. It is the greater of $300 million and 100% of Consolidated EBITDA, $336.7 million with Lariat and its run-rate cost savings. Case C uses $95.0 million of it and leaves $241.8 million; Case A leaves $120.4 million.

The test that decides between the cases is the platform’s own 2028 funding need: $113 million of development debt above the revolver.

• Case A, all debt, clears every test but leaves a $38.9 million cushion for 2028 development funding. One delayed project or a softer EBITDA year and the build program needs equity.
• Case C, half debt and half equity, leaves $290.1 million of cushion and keeps leverage at 5.13x. That is the recommendation.
• The add-back cap does not bind. The $5.6 million of run-rate cost savings counted in Consolidated EBITDA is well inside the 20% cap of $66.2 million.
• MFN is not triggered, but the timing is tight. The incremental’s all-in yield is 25 bps above the term loan, inside the 50 bps cushion, and the add-on closes exactly at the end of the 12-month MFN window.
• The revolver is at 33.5% usage, just under the 35% that springs the 8.00x covenant. A larger revolver draw to fund the deal would bring the covenant into play.
• The incumbent lenders would have allowed it. Under the A&R credit agreement that the staple refinances, the add-on fits the 6.75x ratio prong and the permitted-acquisition test, with 2.46x of headroom to the 7.50x covenant in Case C. The staple’s free-and-clear basket is larger than the old one, its ratio prong much tighter (the 4.76x closing level against 6.75x), and its only covenant springs on the revolver.

Accretion and dilution, the way a fund measures it

The add-on is accretive to value per unit in every case: at close from $11.24 to $11.34 in Case C, and $11.62 once run-rate synergies are in. Leverage is dilutive in Cases A and C, and neutral only when half the price comes from new equity.

The per-unit lines are the platform’s version of EPS accretion. New equity in Cases B and C is issued at the platform’s mark of $11.24 a unit, so a case that issues units has to earn more on the add-on than the platform earns on itself. Lariat bought at 15.0x and held at 18.0x clears that bar from the first day. In 2028, before the synergies are fully in, interest coverage is 3.26x in Case C and 3.05x in Case A, against 3.33x standalone.

Every case is accretive on value; the trade-off is leverage and coverage against debt capacity.

Pro forma leverage and the effect on returns

For existing unit holders, all debt is worth the most: $0.67 a unit at exit, against $0.45 in Case C. Case C gives up $0.22 a unit to keep $251 million more debt capacity for the build program.

At a 2030 exit at 18.0x, the standalone platform is worth $21.63 a unit. Case A takes it to $22.30, Case B to $22.00 and Case C to $22.08. On the whole fund’s cheque, sponsor MOIC moves from 2.16x to 2.20x in Case C and 2.23x in Case A: an add-on of this size moves the fund’s return by a few hundredths of a turn.

On the add-on’s own equity, Case C makes 49.6% and 3.35x to 2030. Multiple arbitrage ($45.3 million) and synergies ($138.7 million) are 67% of the $276.4 million gained over the equity invested; standalone growth and debt paydown make up the rest, less fees and costs to achieve.

The attributed IRR flatters the deal. Buying at 15.0x and marking at 18.0x is worth $45.3 million on the first day, and synergies capitalized at 18.0x are worth $138.7 million by 2030. Both rest on the platform’s multiple holding and on a single campus being valued like the platform once it is inside it.

With no synergies at all, the add-on equity still clears 20% at the 15.0x purchase price: 26.3%. That depends on buying below the platform’s 18.0x multiple: at 17.0x with no synergies it makes 17.8%.

The grid answers the seller’s comparable. At 17.0x, $256.7 million, the full synergy case still makes 41.2%: the price decides whether the deal works without synergies, and the synergies decide how well it works. Paying a real estate price is another matter: the Carrollton sale’s 5.80% cap rate on Lariat’s NOI would be about $350 million, 23x EBITDA, above the platform’s own multiple. The two that need the most diligence are the G&A cut and the TXU supply renewal after 2028.

Methodology. The example is fictional: Project Voltaic is the sale of Ironvale Digital Infrastructure, a made-up data center operator, with a full data room. Inputs from the data room are the FY2026-FY2030 budget and plan (2.06), campus NOI and power cost (3.05, 3.07), the campus appraisals (7.08), the rate card (4.04), the leasing pipeline (4.03), the vendor list (9.05), fibre and carrier presence (12.02), the utility and energy summaries (6.01, 6.02), the tax structure (12.04), the staple financing terms (11.10) and the A&R credit agreement (9.07). Deal-team assumptions, labeled in the workbook, are everything else: the platform’s purchase price (18.0x FY2026 budget adjusted EBITDA) and the 18.0x mark at the add-on close and at exit; Project Lariat’s financials, price and G&A headcounts; Term SOFR held at the staple’s illustrative 3.75%; the incremental term loan at SOFR + 3.25% and 99.0; the 3.0% utility escalator; the synergy savings rates, tie counts, probability weighting, flow-through and phase-in; and the costs to achieve. The model was built in Compound.

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