3 Why could growth through a series of bolt on acqusitions c

Solution

Bolt-on acquisition is an incremental change for the company because it changes its business model. Indeed, an example can be an extension of the company’s product offering. This type of acquisition creates value when the premium paid is not too high. On the other hand, large acquisition creates less value because it typical happens when the market is already mature and there are fewer capabilities. This type of acquisition creates less value because there is no synergy between the two companies: the acquiring company will show revenue growth, which is not increasing by the acquisition of the new company. This acquisition method is more expensive and also more complex than the bolt-on acquisition because it required the business to incorporate the new company into its existing business.

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