A:

A t

uck-in acquisition, often referred to as a "bolt-on acquisition", is a type of acquisition in which the acquiring company merges the acquired company into a division of the acquiring entity. Often, this technique is used when the acquiring company wishes to obtain a significant comparative advantage, but at a lower cost than would be required for the acquiring company to implement the changes on its own. A successful tuck-in acquisition can increase revenues and broaden the acquiring company's capabilities and resources.

An example of a tuck-in acquisition would be a large, traditional bank that chooses to purchase a rapidly growing investment bank because it would like to offer investment banking services, but without the expense and time that would be needed to build the investments division from scratch. Tuck-in acquisitions occur frequently within markets that are beginning to mature. In addition, tuck-in acquisitions occur in situations where organic growth within a niche would be more cost- or time-prohibitive than acquiring an industry competitor or potential competitor.

(For more on this topic, read Mergers and Acquisitions: Introduction.)

This question was answered by Richard C. Wilson.

RELATED FAQS
  1. What happens to the stock prices of two companies involved in an acquisition?

    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. ... Read Answer >>
  2. What is the difference between a merger and an acquisition?

    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
  3. In which industries are mergers and acquisitions most common?

    Learn the reasons why the health care, technology, financial services and retail sectors typically involve a high level of ... Read Answer >>
  4. What are some common accretive transactions?

    Find out about accretive transactions and how analysts determine whether or not an acquisition is accretive or dilutive by ... Read Answer >>
  5. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    Learn about mergers and acquisitions and how these two corporate actions differ based on the size and participation of the ... Read Answer >>
Related Articles
  1. Investing

    What Investors Can Learn From M&A Payment Methods

    How a company pays in a merger or acquisition can reveal a lot about the buyer and seller. We tell you what to look for.
  2. Investing

    How The Big Boys Buy

    Learn what those in-the-know look for when acquiring a company.
  3. Insurance

    Key Players In Mergers And Acquisitions

    Strategic acquisition is becoming a part of doing business. Discover the different types of investor groups involved.
  4. Tech

    Top Tips for Buying a Financial Advisory Practice

    When acquiring a new financial advisory practice, make sure that your game plan avoids these acquisition missteps.
  5. Investing

    Analyzing An Acquisition Announcement

    These deals can make or break investors' returns. Find out how to tell the difference.
  6. Small Business

    Why Successful Business Owners Sell Out

    Learn the motives that drive companies into the arms of an acquirer.
  7. Investing

    How Foreign Exchange Affects Mergers and Acquisitions Deals

    Learn how foreign exchange rates can impact the flows of international merger and acquisition (M&A) transactions, and understand how deals can impact exchange rates.
  8. Small Business

    What Merger And Acquisition Firms Do

    The merger or acquisition process can be intimidating. This is why merger and acquisition firms step in to facilitate the process.
  9. Investing

    Mergers Put Money In Shareholders' Pockets

    Learn the five ways mergers and acquisitions can increase a company's value.
RELATED TERMS
  1. Tuck-In Acquisition

    The acquisition of a company made for the sole purpose of merging ...
  2. Acquisition

    A corporate action in which a company buys most, if not all, ...
  3. Acquisition Premium

    The difference between the estimated real value of a company ...
  4. Horizontal Acquisition

    The acquisition of one company by another in the same industry. ...
  5. Busted Takeover

    A highly leveraged corporate buyout that is contingent upon the ...
  6. Dilutive Acquisition

    A takeover transaction that will decrease the acquirer's earnings ...
Hot Definitions
  1. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center