A tuck-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.
Tuck-In Acquisitions: An Example
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.