M&A Integration: Creating Value from High Priced “Tuck-in”​ Acquisitions

The Landscape Today

Challenges with Tuck-in Acquisition Valuation

Integration Strategies for Tuck-Ins

  1. Product-Centric — there are several ways of integrating products for value and they center on understanding the source and sustainability of products during the diligence. This creates a product road map for preserving key elements of value and enhances other areas, such as portfolio fit and profitability by Day One. Create opportunities for product bundling, rationalizing products or features quickly, and understand opportunities for new product development as a long-term play. Moreover, bundles and pricing can drive incremental value if executed well.
  2. User Value Centric — this is the new lever in the era of the user, content, and data monetization, enabling a variety of business models from advertising, subscriptions, x-selling, and up-selling. Total users and active users present unique sources of value. Understanding the key attributes of user data, its value by segment and monetization potential should brief the integration plan.
  3. Channel Centric — channels or routes to market are a key value driver — certain products are well-suited to specific channels. As a new product embeds in the portfolio, leveraging the buyer’s channel for scale, or reaching new customer segments is critical. A key aspect of delivering value is to make sure that customer segments, brands, products, and pricing align quickly to support the channel early in the transaction cycle and clear barriers such as channel conflicts, efficiencies, and carry factors.
  4. Talent Centric — tuck-in’s come with two clear value plays i.e., Product (or Technology) and Talent (Acqui-Hires, the new funky industry name for it), the success of one without the other is questionable. However, the major difference is that Talent Centric transactions are originated from Product teams (usually not Corporate Development). Talent can be reassigned to work in various parts of the business despite the target’s product. Retaining these individuals is key, and cultural diligence early on helps identify risks with talent including implications on talent strategy, retention planning, career paths, and risks of alienating existing talent. Acceleration opportunities for products, go to market, and impact on recruiting budgets need to be measured rigorously to capture and report the value to shareholders.

Concluding Thoughts



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store