Bolt-on Acquisition

A smaller, complementary acquisition added to an existing platform company to expand capabilities, geography, or product offerings.

A bolt-on acquisition (or "tuck-in") is a smaller company acquired and integrated into an existing platform company to add capabilities, customers, or geographic reach.

Bolt-on Characteristics

Typical Profile:

  • $500K-$2M EBITDA
  • Acquired at 2-4x EBITDA
  • Complementary products/services
  • Geographic expansion
  • Talent acquisition

Bolt-on Value Creation

Multiple Arbitrage:

Bolt-on: $750K EBITDA × 3.0x = $2.25M
After Integration:
Combined EBITDA contributes to platform
Platform sells at 6.0x
Value of $750K EBITDA at exit = $4.5M
Value created: $2.25M

Synergies:

  • Eliminate duplicate overhead
  • Cross-sell to combined customer base
  • Purchasing power improvements
  • Shared facilities and equipment

Bolt-on Risks

  • Integration complexity: Cultural and systems
  • Management bandwidth: Distraction from operations
  • Execution risk: Synergies may not materialize
  • Debt capacity: Each acquisition uses leverage

Bolt-on Sourcing

Most bolt-ons sourced through:

  • Direct outreach (often from platform CEO)
  • Industry relationships
  • Competitors of the platform
  • Referrals from platform customers/vendors

Related Terms

platform companyroll upsynergy

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