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).