Synergies in M&A transactions
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– Try to categorize the synergies between cost or revenue synergies
– During due diligence, come up with conservative estimates for each synergy. Test those estimates via modelling or interviews with key personnel
– Try to build a phased approach into your models and assumptions, as it will take time
– Try to account for integration costs, and operational / execution risks
– Continually and regularly monitor the integration effort relative to the synergy goal. Establish performance tracking and feedback loops
– Communicate regularly with all internal and external stakeholdersMy biggest piece of advice would be to create multiple scenarios to account for different integration strategies and potential outcomes, allowing for flexibility and risk mitigation.
In my experience, the original strategy almost always is adjusted, and it’s easier to have alternative plans to fall back on.
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