Business, Legal & Accounting Glossary
A bolt-on acquisition is a company that a private equity (PE) firm adds to one of its platform companies. Typically, a private equity firm will partner with a larger company that has a market position. Because it has the management capabilities, infrastructure, and systems to allow for organic or acquisition growth, this larger company becomes a platform for market expansion.
The platform company will seek bolt-on acquisitions that provide complementary services, technology, or geographic footprint diversification while being easily integrated into the existing management infrastructure.
Bolt-on acquisitions typically involve smaller companies with limited financial and administrative infrastructure. They are typically run by the company owner and have reached a point where they can no longer grow due to a lack of capital, scale, or management expertise. They may have inefficient financial systems, information technology, and internal controls, but they are typically excellent operating companies with strong customer relationships.
Bolt-on acquisition owners are typically looking to relocate administration and corporate management so that they can focus on operations and customers. This is why private equity-backed platform companies or corporate buyers with existing infrastructure can be a good fit. Because these companies lack infrastructure, buyers will typically pay a lower valuation multiple for a bolt-on acquisition than they would for a platform company.
Tuck-in Acquisition
Add-on Acquisition
Add-On Acquisition
Roll-Up
Tuck-In Acquisition
Private Equity
Platform Company
Multiple
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This glossary post was last updated: 11th August, 2022 | 0 Views.