Bolt-on acquisition

Definition

A smaller company bought to fold into a platform business already operating.

Why It Matters

Roll-up strategies live or die on these add-on deals, because a bolt-on bought at a low main-street multiple and merged into a larger platform is instantly worth the platform's higher multiple. For a searcher running a platform, each bolt-on also spreads fixed overhead across more revenue, which is where the margin expansion in a roll-up actually comes from.

In numbers: A $600,000 EBITDA add-on bought at 4x costs $2.4M, and inside a platform the market values at 6x the same earnings are worth $3.6M. That gap is the arithmetic of a roll-up.