Transaction Advisors

Why some merging companies become synergy overachievers

About 70% of merging companies overestimate synergies according to new Bain & Company analysis comparing deal announcements with the performance of 31,000 companies.

By Laura Miles, Adam Borchert and Alexandra Egan Ramanathan

First published on Σεπτεμβρίου 30, 2014
min read


This article originally appeared in Transaction Advisors (subscription required). Realizing anticipated synergies through a merger is quickly becoming a significant source of disappointment post-transaction. A recent survey found that overestimating synergies was the second most reported source of deal disappointment, ranking only behind due diligence failures. This article analyzes what the best companies do when estimating, announcing, and ultimately pursuing deal synergies. These authors found that across the industries analyzed, almost three-quarters of all companies announced higher synergy estimates than would be expected from an increase in the scale of operations alone. Similarly, data showed that companies whose cost structures lagged behind industry norms pre-merger typically announced higher synergies than would be expected from scale benefits alone. Read the full article in Transaction Advisors (subscription required).

This article originally appeared in Transaction Advisors (subscription required).

Realizing anticipated synergies through a merger is quickly becoming a significant source of disappointment post-transaction. A recent survey found that overestimating synergies was the second most reported source of deal disappointment, ranking only behind due diligence failures.

This article analyzes what the best companies do when estimating, announcing, and ultimately pursuing deal synergies.

These authors found that across the industries analyzed, almost three-quarters of all companies announced higher synergy estimates than would be expected from an increase in the scale of operations alone.

Similarly, data showed that companies whose cost structures lagged behind industry norms pre-merger typically announced higher synergies than would be expected from scale benefits alone.

Read the full article in Transaction Advisors (subscription required).