What is a tuck in?
A “tuck in” is predicated on “tucking in” the sales of one company into the infrastructure of the buyer. Profit expectations are based on the consolidation savings and the revenue enhancements. The incremental profit to the buyer is used to formulate a “price” for the general intangible assets of the seller, the customer relationships. The “structure” is based on risk allocation between the parties, meaning, what happens if things don’t work out as planned. One of the keys to success of a “tuck in” strategic acquisition is that the customer requirements of the seller have to fit the capacity and infrastructure of the buyer.
