Explore the concept of synergy in mergers and acquisitions, where the combined value and performance of two companies exceeds that of their individual parts, sometimes leading to a synergy merge characterized by increased revenue, combined talent and technology, and significant cost reductions.
- Synergy is the concept that the combined value and performance of two companies will be greater than the sum of the separate individual parts.
- Synergy is a term that is most commonly used in the context of mergers and acquisitions (M&A).
- Two businesses can form one company that is capable of producing more revenue than either could have been able to independently, or to create one company that is able to eliminate or streamline redundant processes, resulting in significant cost reduction.
- If two companies can merge to create greater efficiency or scale, the result is what is sometimes referred to as a synergy merge.
- The expected synergy achieved through a merger can be attributed to various factors such as increased revenues, combined talent and technology, and cost reduction.
Excel example:
B31=B27
B32=B15
B33=MAX(B32-B31,0)
B34=B33*B25
B35=B34/(1-C13)
B36=MAX((B32-B31)*B25/(1-C13),0)