I'm trying to understand some concrete examples of what a synergy might be in an M&A case. On the revenue side, I get how cross-selling would work but I'm struggling to understand how product compliments or R&D synergies might work. Could someone give an example of each?
M&A cases - synergy examples
For Synergies Calculation cases you can use the following structure:
- Revenue synergies - here you calculate the synergies in price and quantity (depending on the case it may be new geographies, new products, new distribution channels, bigger share on shelves crosselling opportunities, etc.)
- Cost synergies - typically you use a value chain structure tailored to the industry (e.g. supply-production-distribution-marketing-after sales support)
- Capital synergies (Not relevant for consulting interviews. But you should mention them if applying to private equity)
- Risks - major risks that can decrease the synergies (tip: don't underestimate the merging companies culture factor)
- Total synergies potential in $, adjusted by risk (probability of failure)
R&D synergies - product IPs that one company has if another company can produce this product. Not sure what you mean exactly by product compliments. But for example a whiskey producer will have synergies with bottle or packaging manufacturer
Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.1 Q&A
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Der Klient ist eine französische Holding, welche einen jährlichen Umsatz von €1 Milliarde hat. Sie halten fast alle Arten von Unternehmen, die meisten in der „Low tech Herstellung“, darunter unter anderem auch „Öl & Gas“ und „Automobil“ Firmenteile. Es gibt keinen bestimmten Bereich auf den sie ihr ... Ganzen Case öffnen