Synergies are simply another name for the goodwill recorded in purchase accounting
The reduction in the combined company's effective tax rate after the deal closes
The interest expense saved by refinancing the target's existing debt at a lower rate, because synergies in a merger model come entirely from cheaper financing rather than operations
The control premium the acquirer pays over the target's unaffected market price, since synergy is just the label bankers give to the excess of the offer over the trading price
Extra value from combining two companies: cost synergies (e.g., cutting duplicate costs) and revenue synergies (e.g., cross-selling, entering new markets)
Create a free account to answer
It's free — sign up to answer questions and track your mastery.