revenue synergy - same or different?

Question

If two companies merge, is 1) cross-selling opportunity 2) multi sales channel opportunity (for eg if one used online but you did only retail) and 3) Multi geography opportunity (if you are local and they are global)..all 3 DISTINCT revenue upside ideas? Or would this be the same because ultimately the common denominator is “more sales/customers"? Just wanted to know if i can list these as 3 different brainstorming ideas on what are synergies from merger or would interviewers consider this the same thing?

Answer 1

Hi,

Are you looking at cost savings/revenue synergies once the two firms have merged?
or is your question about evaluating synergies to make a decision on go/no-go for M&A or for integration once the M&A is done?

Cost Saving & Revenue synergies

Complementary products/services
Channel (retail, online, phone etc)
Supply chain synergies
Shared IT
People synergies (from CEO to ground staff)
Scale efficiencies/Capital

Evaluating synergies for go/no-go

Financial analysis
Customer segments
Product/Service mix
Supply Chain

Integration

Processes
People
IT stack

Pick out the most relevant ones depending on the case and elaborate on key points. No need to drill too much per area..1 or 2 examples are good enough. Keep your overall structure to 3-4 branches.

Answer 2

Hi there,

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

Generally speaking, yes, these are distinct revenue synergies who ultimately still all drive an increase in revenues.
I would advise you to structure your ideas, for instance in 1) synergies penetrating existing markets and 2) synergies expanding existing markets. Moreover, you can also think of product bundling as an additional synergy similar but still different to cross-selling.

In case you want a more detailed discussion on how to best approach M&A case studies, please feel free to contact me directly.

I hope this helps,

Hagen

Answer 3

Hi!

There is indeed some overlap.

Try to structure these synergies based on key buckets (e.g. clients, distribution channels, etc.) and their impact on volume and price to be MECEer.

Hope this helps.

Best,

Anto

Answer 4

Hi there,

To be honest I don't really understand your third synergy. What about the multi geographies is a synergy? Geographies in-and-of-themselves are not synergies…rather you have to say what synergy is taking place (cross-selling, bundling, data analytics, etc.).

Answer 5

You have to phrase it differently for those to be distinct revenue upside opportunities, because in (2) and (3) you are cross-selling (1).

The way I would say it would be:

1) Cross Sell to current customer base (in current channels and countries)

2) Expand to new channels

3) Expand to new countries

Of course, these are all a subset of increasing the number of customers. Please note they are not the same synergy, but rather distinct subsets of the same type of synergy.

So you can present “more customers” as the first layer, and those 3 ideas as the second layer. Which is actually what you should do - staying only at the first layer is very generic and not considered a strong response.