A:

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. (See also: Mergers and Acquisitions: An Introduction.)

This question was answered by Richard C. Wilson.

RELATED FAQS
  1. How company stocks move during an acquisition

    During an acquisition, there's a short-term impact on the stock prices of both companies. Typically, the target company's ... Read Answer >>
  2. What is the difference between a merger and an acquisition?

    Learn about the legal differences between a corporate merger and corporate acquisition – terms used when companies are either ... Read Answer >>
  3. How do I evaluate whether a company is a good acquisition candidate?

    Evaluate whether a company is a good acquisition candidate by analyzing its price, debt load, litigation and financial statements. Read Answer >>
  4. Why do companies merge with or acquire other companies?

    The reasons for company mergers and acquisitions include synergy, diversification, growth, improving competition, and supply ... Read Answer >>
  5. What is the difference between a merger and a takeover?

    In a general sense, mergers and takeovers (or acquisitions) are very similar corporate actions - they combine two previously ... Read Answer >>
  6. Green Field vs. Acquisition to Enter New Country?

    A business considering new international operations must decide whether to create a new site via a green field investment, ... 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.
  2. Insurance

    Key Players In Mergers And Acquisitions

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

    Analyzing an Acquisition Announcement

    These deals can make or break investors' returns. Find out how to tell the difference.
  4. Investing

    Why Google May Need To Buy Salesforce To Beat Amazon

    A major acquisition might help Google catch up in cloud computing.
  5. Investing

    The Five Biggest Acquisitions in History

    Here's a list of the top acquisitions in the history of global corporations.
  6. Small Business

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  7. Financial Advisor

    Acquire a career in mergers

    This exciting sector demands a lot from its advisors. Are you up for it?
  8. Investing

    The Wonderful World Of Mergers

    While acquisitions can be hostile, these varied mergers are always friendly.
  9. Investing

    8 Companies That Could Be Acquired Next (SHAK)

    LinkedIn has just been acquired by Microsoft. Who might be next?
RELATED TERMS
  1. Acquisition

    An acquisition is a corporate action in which one company buys ...
  2. Acquisition Premium

    An acquisition premium is the difference between the estimated ...
  3. Acquisition Cost

    The acquisition cost is the cost that a company recognizes on ...
  4. Defensive Acquisition

    Defensive acquisition is a corporate finance strategy describing ...
  5. Acquisition Adjustment

    An acquisition adjustment pertains to the premium a business ...
  6. Horizontal Acquisition

    A horizontal acquisition is when one company acquires another ...
Trading Center