Synergy in Mergers and Acquisitions: Typology, Life Cycles, and Value

Feldman, Emilie R.; Hernandez, Exequiel

doi:10.5465/amr.2018.0345

Cited by 46 publications

(77 citation statements)

References 83 publications

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“…According to Sakhartov and Reuer (2021), "synergy is the enhancement in performance of a multi-business firm over the performance of its constituent businesses if they were operated as separate, single-business firms" (Sakhartov and Reuer 2021, p. 3). Similarly, Feldman, and Feldman and Hernandez (2021) summarized that synergy is "a combination of two firm's assets that are more valuable together than they are separate" Feldman and Hernandez (2021, p. 2). Hoberg and Phillips (2010) provided direct evidence on asset complementarities as a source of synergy and gains of a merger.…”

Section: Exploring Types Of Synergies and Valuation Of Synergies In M...mentioning

confidence: 99%

“…If there is a high modification of resources needed, the synergy derives from the consolidation of similar resources or the customization of dissimilar resources. Feldman and Hernandez (2021) found that research since the 1980s demonstrated that market value added arises through strategic cooperative interactions; however, "these theoretical advances have not systematically made their way into the M&A literature" (Feldman and Hernandez 2021, p. 6). Furthermore, the McKinsey & Company found that only 20% of acquirers publicly announced and disclosed the synergies they intended to capture (Agrawal et al 2017).…”

Section: Exploring Types Of Synergies and Valuation Of Synergies In M...mentioning

confidence: 99%

“…This paper aims to explore multiple types of synergies in the recent highly strategic cross-border merger-the Luminor Group AB (Sweden) deal-and to value five types of synergies (Feldman and Hernandez 2021) with the real options application. The motivation of this research is as follows.…”

Section: Introduction: the Aim Motivation And Contributionsmentioning

confidence: 99%

“…The motivation of this research is as follows. Having explored the synergistic combination of an acquirer and a target, scholars unpacked novel synergy sources and typical synergy management pitfalls of mergers and acquisitions (M&A) (Fiorentino and Garzella 2015;Sakhartov and Reuer 2021;Feldman and Hernandez 2021), but they did not bind synergism with the real options theory. Several authors employed the real options valuation to measure the synergy effect of M&A deals (Yu and Xu 2011;Loukianova et al 2017;Barbopoulos et al 2019), but they did not specify the type, timing, and duration of synergies in merger and acquisition (M&A) processes.…”

Section: Introduction: the Aim Motivation And Contributionsmentioning

confidence: 99%

See 3 more Smart Citations

Measuring Synergies of Banks’ Cross-Border Mergers by Real Options: Case Study of Luminor Group AB

Čirjevskis

2021

JRFM

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Applying the real options valuation to measure merger and acquisition (M&A) synergy is highly debatable, with questions arising from the usefulness of this approach in real-world settings. Understanding the full benefits (and possible limits) of real options applications to measure synergy in cross-border merger activities remains a challenge. The main objective of the paper is to explore multiple types of synergies in the recent, highly strategic cross-border merger—the Luminor Group AB deal—and to value those synergies with the real options application. The research found that the sum of values of different types of synergies in M&A deals as the market value added provided by this deal could be valued with real options applications. A real options application may serve as a decision-making tool and at the same time be a useful valuation method of M&A deal synergies. The implications of this paper are twofold. First, the research contributes to corporate financing by providing relevant synergy measurement models in M&A deals. Second, the paper contributes to “grand challenges’’ research topics of international businesses by illustrating how a group of multinational banks solved the problem of income inequality across countries, and balanced inequality within their networks through a cross-border merger.

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Section: Exploring Types Of Synergies and Valuation Of Synergies In M...mentioning

confidence: 99%

Section: Exploring Types Of Synergies and Valuation Of Synergies In M...mentioning

confidence: 99%

Section: Introduction: the Aim Motivation And Contributionsmentioning

confidence: 99%

Section: Introduction: the Aim Motivation And Contributionsmentioning

confidence: 99%

See 2 more Smart Citations

Measuring Synergies of Banks’ Cross-Border Mergers by Real Options: Case Study of Luminor Group AB

Čirjevskis

2021

JRFM

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“…In this vein, the ARCTIC framework contributes to the second gap by integrating the assessment of "strategic fit" with the "organizational fit" of collaborative strategies in a single analytical tool to assess the prerequisites of collaborative synergies (Feldman and Hernandez 2021). Therefore, the study contributes to the "strategy as practice" interest of the Strategic Management Society (SMS) with a fresh piece of empirical research on the synergism of "strategic fit" and "organizational fit," together with the ARCTIC framework.…”

Section: Introductionmentioning

confidence: 99%

Exploring Critical Success Factors of Competence-Based Synergy in Strategic Alliances: The Renault–Nissan–Mitsubishi Strategic Alliance

Čirjevskis

2021

JRFM

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This paper aims to unbundle the antecedents of competence-based synergy in the strategic alliance formation process by employing the ARCTIC framework. The current research provides a new empirical application of the ARCTIC framework to reveal the success factors of reciprocal synergies of the Renault–Nissan–Mitsubishi strategic alliance in the automotive industry. By taking a resource-based view on the sources of competitive advantage, the current paper contributes to theoretical and practical issues of global strategic alliances as part of the existing literature on strategic management, international business, and corporate finance. By bridging qualitative and quantitative research methods, the paper provides validity to the ARCTIC framework with an application of the real option valuation. A conceptual model of research helps practitioners and scholars to explore critical success factors of alliance formation and to predict a competence-based synergy of strategic alliances. Future research may explore the institutional context of strategic alliances, specifically, exploring the impact of the French and Japanese governments on the Renault–Nissan–Mitsubishi alliance’s synergies.

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Diversification and company sales efficiency: Synergy influence on business valuation

Wang,

Abdullayeva,

Hoang

2023

Manage Decis Econ

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The purpose is to show the main methods of calculation and analysis of various organizations' indicators to demonstrate, using a practical example, the synergistic effect's significance and role in the diversification and a rise in sales when making M&A (mergers and acquisitions) transactions. The methods applied are mathematical formulas and various empirical and statistical data from various literature sources. The study's findings underscore the importance of understanding the synergistic effect of M&A. The research results can be valuable for corporate executives, investors, and business consultants involved in M&A.

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Synergy in Mergers and Acquisitions: Typology, Life Cycles, and Value

Cited by 46 publications

References 83 publications

Measuring Synergies of Banks’ Cross-Border Mergers by Real Options: Case Study of Luminor Group AB

Measuring Synergies of Banks’ Cross-Border Mergers by Real Options: Case Study of Luminor Group AB

Exploring Critical Success Factors of Competence-Based Synergy in Strategic Alliances: The Renault–Nissan–Mitsubishi Strategic Alliance

Diversification and company sales efficiency: Synergy influence on business valuation

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