Tuck-In Acquisition - Explained
What is a Tuck-In Acquisition?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is a Tuck-In Acquisition?How does a Tuck-In Acquisition Work? Illustrations of Tuck-In AcquisitionsAcademic Research on Tuck-In Acquisitions
What is a Tuck-In Acquisition?
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 companys market shares as well as stock prices.
How does a Tuck-In Acquisition Work?
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.
Academic Research on Tuck-In Acquisitions
- 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.