What is a tuck-in acquisition?

By Richard Wilson AAA
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. In an IPO, who is a greensheet distributed to and for what purpose?

    One of the most talked about documents that arises in the process of introducing a new issue is the greensheet. This is an ...
  2. What is the Pac-Man defense?

    The Pac-Man defense is a strategy in which a company that is facing a hostile takeover from another company essentially turns ...
  3. If a company undergoes an acquisition can an employee withdraw 401(k) funds tax free?

    Although the participant may be eligible to withdraw the funds if a plan is terminated as a result of an acquisition or other ...
  4. What is a company's worth, and who determines its stock price?

    A company's worth - its total value - is its market capitalization, and it is represented by the company's stock price. Market ...
RELATED TERMS
  1. Roll-Up Merger

    A rollup (also known as a "roll up" or a "roll-up") ...
  2. Revlon Rule

    The legal requirement that a company’s board of directors make ...
  3. Volcker Rule

    The Volcker rule separates investment banking, private equity ...
  4. Business Consolidation

    The consolidation of several business units or several different ...
  5. Golden Bungee

    A benefit conferred to select top executives that is a combination ...
  6. Management Buyout - MBO

    A transaction where a company’s management team purchases the ...
comments powered by Disqus
Related Articles
  1. War's Influence On Wall Street
    Bonds & Fixed Income

    War's Influence On Wall Street

  2. What You Need To Know About Net Neutrality
    Stock Analysis

    What You Need To Know About Net Neutrality

  3. What You Need To Know About Financial ...
    Insurance

    What You Need To Know About Financial ...

  4. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  5. What Is Private Equity?
    Investing Basics

    What Is Private Equity?

Trading Center