Bolt-on acquisitions are one of the most powerful tools in an investor’s playbook. On paper, they look simple - a small, complementary business that plugs neatly into a platform company, unlocking growth, efficiency, and market share.
They’re exciting. They often feel straightforward. And, at least the first few times, they are fun. But as any investor who’s done several will tell you, bolt-ons can quickly turn from a fast track to scale into a drain on time, energy, and capital.
At Nash Capital, we’ve seen both sides of the equation -bolt-ons that have supercharged platform value and those that have sapped resources far beyond expectations. Here are a few hard-earned insights from the trenches.
In theory, it always looks so attractive.
- Acquirer: XYZ trades on a 7.5× EBITDA multiple with a full C-suite cost base.
- Target: ABC runs lean, generating $1 million EBITDA.
- Deal: Acquired at 5×.
On paper, that’s a slam dunk - a theoretical $2.5 million paper profit before synergies.
In reality, these deals rarely play out quite so neatly.
1. The Smaller the Target, the Harder the Work (Sometimes)
It’s tempting to assume that smaller means simpler. Fewer people, lighter diligence, less complexity - right?
Not always. Smaller targets often lack experienced advisors, or any at all. Financial statements are incomplete, data rooms are disorganised, and key information - from staff costs and lease terms to vehicle expenses - is patchy or outdated.
This lack of structure increases both time and cost. What starts as a “quick” add-on can take months to unwind and verify. The irony is that the tiniest acquisitions often demand the most hands-on work.
2. The Hidden Cost of Underestimated Expenses
One of the most common traps is underestimated costs.
Founders of small, hands-on businesses frequently run lean and informal operations. They don’t always allocate full costs for salaries, vehicles, rent - or even their own time. Once those are normalised, a business that appears to make $1 million profit can shrink to $500,000 or less.
That’s not a rounding error - it’s a deal-breaker. It can change the valuation, deal structure, and expected returns.
At Nash, we’ve learnt to ask the right questions before spending hundreds of hours and dollars on diligence:
- “Do you charge market rent?”
- “Do you pay yourself a market salary?”
- “Does your daughter actually work in the business?”
These simple questions often reveal more than any spreadsheet.
3. Sector Dictates the Difficulty
Not all bolt-ons are created equal. Some sectors lend themselves to fast, clean integrations. Others are messy and slow.
Quicker deals: Technology, SaaS, and digital businesses. Their systems are standardised, data is clean, and customers are less dependent on individual founders. Integration is largely a systems exercise.
Longer deals: Waste management, industrial, and trade-based businesses. These typically have larger workforces, bespoke processes, and founders who are deeply embedded in daily operations. That founder is often the glue that keeps everything running - and when they step back post-acquisition, inefficiencies surface quickly.
In most cases, these founders remain tied to the business through earn-outs or holdbacks for 6–12 months, ensuring a smooth transition. But these deals demand not just diligence - they require thoughtful transition planning and active post-acquisition management.
4. Integration is Where Value is Made - or Lost
Buying a bolt-on is the easy part. Integrating it is where the real work begins.
Cultural alignment, systems compatibility, customer retention, and leadership continuity determine whether the bolt-on delivers its intended value. Without a disciplined plan, even the most strategic acquisition can become a distraction.
At Nash, we’ve developed a detailed acquisition and integration framework across our 22 bolt-ons. The small things tend to trip management up:
- Transferring Google AdWords or business listings
- Updating payment systems and payroll
- Collecting revenue under the new entity
- Booking jobs correctly across systems
The details may seem trivial, but miss them, and you feel it quickly.
5. Know When to Walk Away
Not every bolt-on should happen. The best investors are those willing to walk away from a deal that doesn’t stack up, no matter how strategic it looks on paper.
If the data is messy, the founder indispensable, or the costs too opaque, it’s often wiser to redirect that time and capital. A great bolt-on should accelerate growth, not consume it.
6. Match the Deal to Your Investment Cycle
Even when a bolt-on is attractive, timing matters.
In private equity, you’re always “open for business”, but that doesn’t mean every deal makes sense. If your existing investment is performing well and edging toward an exit, a new bolt-on might add risk or delay a sale.
A bolt-on should align with your investment cadence, not derail it.
Closing Thought
Bolt-ons remain one of the most effective ways to build value. When done right, they create scale, efficiency, and defensibility. When rushed or under-resourced, they can become costly distractions.
At Nash, our discipline is simple: know what to look for, ask the hard questions early, plan integration from day one, and be ready to walk away when the numbers don’t tell the full story.
Because in the world of bolt-ons, simplicity is often an illusion, and success belongs to those willing to look past it.
