Exploring and extending the synergy concept – a study of three acquisitions

Abstract

Purpose This study aims to contribute with an extended framework on synergy realisation in acquisitions. The study conceptualises synergy realisation after acquisitions, in interaction with other companies in a business network and that synergy can be the result of both intended and not intended actions. Design/methodology/approach The study is based on a company involved in acquisitions, being both the acquirer and the acquired. The data for analysis were collected through semi-structured interviews with managers involved in the described acquisition processes. The semi-structured interviews were guided by overarching themes to cover relevant areas of the described acquisitions. Findings This study develops a framework in which synergy is used as a concept in business networks. The framework offers a more dynamic perspective on acquisition processes and extends the view of acquisition performance beyond more financial and company internal aspects of acquisition processes. Further, the findings show that related companies such as customers and suppliers, play important roles in synergy realisation. Practical implications From a managerial perspective, the study shows the importance of understanding the underlying forces of integration processes. Originality/value The concept of synergy used in this study not only includes the companies integrated in an acquisition but also their business networks. Including the integrated companies and their business networks provides a more dynamic perspective from which to plan and realise synergy.

M&A transactions: Introduction, role of valuation

“…Následující výčet se váže k zde prováděnému výkladu, a týká se tak "komerční" aplikace oceňovací teorie. 11 Tržní hodnota (Market Value) je odhadem částky, za kterou by aktivum či závazek byly směněny k datu ocenění mezi dobrovolným kupujícím a dobrovolným prodávajícím při transakci mezi nespřízněnými osobami po náležitém marketingu, přičemž by obě strany jednaly na základě dostatečných informací, s náležitou rozvahou a bez nátlaku. Tržní hodnota dále předpokládá nejlepší možné využití aktiva (viz Mezinárodní oceňovací standardy -IVS).…”

Comparative Analysis of Company Performance Before and After Mergers and Acquisitions in Company Listed on Idx 2018-2021

“…In the 1960s, the concept of synergy was created in strategic management. According to Andersen et al [19], synergy is "the more effective use of resources to adapt to an evolving environment with intense competitive pressure." Most M&A models, as stated by Gates and Véry [19], have looked at acquisition synergy from the perspective of company financial development, including changes in stock price, sales, investments, and sources of value creation via performance evaluation.…”

Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies

“…Recombination of entities with distinct business profiles may cause acquirers to overestimate prospective synergies: acquirers' and targets' core operations may turn out to be incompatible or require substantial resources to navigate integration. The problem of synergy overestimation [39] is likely to occur if targets are opaque and generate most of their value in the residual period, i.e., in the distant future. Valuation uncertainty tends to favour targets' shareholders, who may be more likely to window-dress corporate reports [40] and offer excessively optimistic cash flow projections.…”