Acquisitions 101 <<Pt.2>>

add-on acquisitions: bolt-on v.s. tuck-in

Happy Friday Founders and Friends!

We hope you enjoyed last week’s newsletter on the different types of acquisitions that can happen in private equity. In this week’s Weekly Bloom, we wanted to dive a bit deeper into the two forms of add-on acquisitions, Bolt-on v.s. Tuck-in. 

Bolt-on acquisition; What is it?

In a bolt-in acquisition, the acquired company remains intact to some degree. In a lot of cases, the company continues to operate under its own brand (names, identity, etc.) but this factor is deal-specific. 

The platform company will look for bolt-on acquisitions that provide similar services, technology or offer a geographic expansion opportunity for the platform company. Additionally, platform companies will look for bolt-on acquisition targets that can be quickly integrated into the platform company’s “infrastructure”. 

A great example of a bolt-on acquisition is Facebook’s acquisition of Instagram in 2012. 

Source: deal room

Tuck-in acquisition; What is it?

Tuck-in acquisitions are largely similar to bolt-ons except for the fact that the smaller company is completely absorbed into the platform company. Tuck-in acquisitions lose their corporate identity and their structure becomes indistinguishable (product, branding, etc) from the platform co.

An example of a tuck-in was Uber’s acquisition of Jump Bikes in 2018

Source: deal room

Interested in learning more about this topic?? Make sure to check out the following below 👇

📚  Bolt-on Acquisitions: Everything You Need to Know

📚 Using systematic bolt-on acquisitions to drive growth

📚 How Do Business Model Differences Impact Your M&A Operating Model Framework

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What We’re Reading and Listening To…

📚 The Art of the LOI

📚 Why Private Equity Likes Founder and Family Owned Businesses

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News from the Industry: deals, deals, and more deals 💰

Intuit confirms $12B deal to buy Mailchimp

SpotOn raises $300M at a $3.15B valuation and acquires Appetize

ConnectWise: $200 Million War Chest for Tuck-In Acquisitions

Microsoft acquires TakeLessons, an online and in-person tutoring platform

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Favorites from the Ecosystem

Investors👇…..

Bart Macdonald • Bloomvp.com @BartMacdonald

If you have worked in M&A you are probably aware of the challenges and headaches that come along with deal underwriting and structuring. I wanted to shed some light on software deal structuring and the two most common acquisition structures in M&A Thread🧵🧵👇:

Justin Vogt @J_M_Vogt

Conflicting advice we get on proprietary sourcing Camp 1: Only send 3 emails. If an owner is interested in selling, they will respond. No sense annoying them with a bunch of emails Camp 2: Follow Up incessantly. Getting an owner's attention is hard, so put more shots on goal

Founders👇…..

Andrew Gazdecki @agazdecki

Nothing wrong with thinking small to start. Solve your own problem before you solve everyone's problem with your startup.

Ravi Parikh @ravisparikh

1/ Pricing your SaaS startup, early-stage edition We just rolled out pricing plans at @AirplaneDev. Before that, I spent 7 years iterating on pricing at @heap. Here's the framework I use. Spoiler: it's not all about maximizing revenue👇

Operators👇….

Michael Martocci 🚀 SwagUp @MichaelMartocci

I see infighting happen here and there within organizations, different teams with different agendas or working in different directions or don’t see eye to eye Need to start with the customer and what they want and work backwards Brings clarity to the noise

BowTiedSalesGuy | Chad Salesman @BowTiedSalesGuy

Pro tip: Try removing your job title from the email signatures in your next cold email The prospect reads “Account Executive” or anything with “Sales” and gets turned off no matter how good your email is.

Good Laugh👇….

Alex Cohen @anothercohen

The official milestone of graduating from kid to adult life is when you stop buying IKEA furniture

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About Bloom Venture Partners

Bloom Venture Partners is a lower mid-market software-focused private equity firm, leveraging deep operational and commercial experience to create enduring market value for the benefit of our investors, founders, and their companies.

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End Note

Thanks for joining us for another edition of the weekly bloom. At Bloom Venture Partners we buy, build + invest in SaaS.

We’re excited to continue backing remarkable teams on their quest of changing the way we work, live + create.

As always, if you enjoyed this week’s newsletter we'd love it if you shared it with a friend, co-founder, or anyone that would find value.