Tuck-In Acquisition Definition
A tuck-in acquisition– also known as a bolt-on acquisition– refers to a state where a bigger company or corporation acquires a smaller firm, and incorporates it into their own company or platform. In this situation, the smaller firm which has been acquired cannot maintain their actions like management, or any initial structure. The acquirer has total control of what happens with this smaller firm, as they provide the firm with new management or operating structures. The main purpose for tuck-in acquisitions is to grow the bigger company’s market shares as well as stock prices.
A Little More on What is a Tuck-In Acquisition
Tuck-In acquisitions are commonly used to gain control of smaller firms which might have resources that are valuable to more prominent firms. These resources can range from market shares, intellectual rights, technology or products. Tuck-in acquisition targets are mostly smaller corporations which resources which are appealing to a bigger firm or the acquirer.
Illustrations of Tuck-In Acquisitions
Let us assume that company A is a large company which publishes books, and Company B is a smaller publishing company which has found a way to distribute royalties for cheaper costs, which has gotten them some recognitions amount authors in the world. Since Company B has the knowledge which Company A needs, the latter company can buy the former and fully incorporate them into their platform, thus having unrestricted access to this knowledge. A real-life example is the incorporation of both Instagram and WhatsApp into Facebook. Although each platform retains its name, they are now part of the Facebook family and operate under the structure of the mother company.
References for “Tuck-In Acquisition”
Academic research for “Tuck-In Acquisition”
Using Mergers & Acquisitions to Achieve Strategic Objectives and High Performance in the Consumer Goods and Services Industry, Thomas, L., Herd, T. J., Dickman, K., Lanius, J., & Francis, N. (2012). Using Mergers & Acquisitions to Achieve Strategic Objectives and High Performance in the Consumer Goods and Services Industry.
Pacing international acquisitions: emerging markets as the new success stories, Du, K., & Jaw, Y. M. (2018). Pacing international acquisitions: emerging markets as the new success stories. Journal of Business Strategy, 39(4), 3-10.
EMC corporation: managing IT M&A integrations to enable profitable growth by acquisitions, Tanriverdi, H., & Du, K. (2011). EMC corporation: managing IT M&A integrations to enable profitable growth by acquisitions.
NEWS & ANALYSIS, Finance, U. P. (2014). NEWS & ANALYSIS.