A bolt-on (or tuck-in) is a small acquisition absorbed into an existing platform company, sharing its overhead, systems, and management rather than operating as a standalone business. It adds customers, capacity, or geography without duplicating back-office costs.
Worked example
| Line | Standalone | After bolt-on |
|---|---|---|
| Revenue added | $900,000 | $900,000 |
| Duplicate admin / owner pay removed | −$120,000 | |
| Purchase price (~2.5× SDE) | $500,000 | $500,000 |
| Effective earnings folded in | $200,000 | ~$320,000 |
Removing the seller's salary and duplicate overhead lifts the earnings the bolt-on actually contributes.
Why it matters when buying a business
Bolt-ons are the fastest way to grow once you own a platform. Each one is smaller and cheaper than the first deal, and the cost synergies drive real multiple arbitrage. The risk is over-paying for a business you can't cleanly integrate, model the synergies conservatively.
