The determination of synergistic value begins with the strategic reasons for pursuing an acquisition. The validity of the strategic objectives must be assessed to determine the legitimacy of the synergy expectations that will be realized. Prioritization will be determined by: Value Creation Potential, Ease of Execution, and Risk Assessment.

The common strategic reasons for an acquisition are:

  • Sales growth through expansion of the customer base
  • Sales growth through product cross-selling opportunities for new customers
  • Competitive advantages and sales growth through the acquisition of new technologies
  • Sales growth provided by a geographic expansion of the business allowing the acquisition of new market territories for existing products
  • Supply chain execution enhancements and consolidation of vendors
  • Purchasing power
  • Cost reductions for the combined organization through the elimination of redundancies in the areas of:
  1. Organizational structure
  2. G&A consolidation
  3. Sales administration consolidation
  4. Manufacturing and office footprint reduction to maximize R.O.I.
  5. Acceleration and enhancement of management and technical talent

Each of the strategic areas are vetted to determine the legitimacy of the objective, as well as to quantify the expected economic benefit to be obtained and determined to be the Synergy value of the transaction.

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