Synergy effects

Synergy effects occur when two companies become more efficient together through a merger or acquisition than they were individually. These effects can take the form of cost savings, increased revenue, or improved processes. In the M&A context, synergy effects are often a key driver for acquisitions, as they enable the companies involved to gain competitive advantages.

Types of Synergy Effects:

• Cost Synergies: Sharing warehouses, logistics, or marketing channels reduces operating costs.
• Revenue Synergies: The customer bases of both companies are combined, leading to higher sales.
• Process Synergies: Optimized processes in IT, customer service, or procurement improve overall efficiency.

Example:
After acquiring a small e-commerce shop, the buyer integrates the acquired company's products into its existing logistics system, thereby reducing warehousing and shipping costs.