Mergers & Acquisitions Integration Handbook, 2nd Edition

CHAPTER 13Synergy Program Management

In this chapter you will learn:

• Introduction to what activities define synergies
• Common synergy assumptions, realities, and planning implications
• How to manage synergy programs within the IMO framework
• How to use some simple tools and templates for tracking and reporting synergies

Almost every merger or acquisition includes cost savings and business benefits arising from synergies (essentially, positive business outcomes as a result of the transaction). Synergies can take many forms, including employee reductions, revenue enhancements, plant rationalizations, store closings, purchasing optimization, and much more. For large transactions, synergies may be the primary driver of the investment thesis and a significant focus for the IMO. For smaller deals, synergies may be more “opportunistic” and less of a priority. The most important thing is that any synergy targets be quantified and clarified early if they underpin the deal thesis.

IMOs are seldom responsible for generating original synergy projections, but they are almost always involved in helping to manage synergy program realizations. The primary synergy targets are usually derived by the corporate development team, perhaps with help from outside advisors. The initial targets may be in a more “macro” state, meaning they have been broadly defined and may be articulated in a low-high range, which requires further validation.

Setting up a robust platform to help realize synergies is a critical ...