What Are Synergies, and How Do They Affect an M&A Deal?

Synergies are the financial benefits expected from combining two companies. They can make an acquisition more valuable and improve the buyer’s earnings per share, but they also introduce execution risk. Understanding where synergies come from—and how they flow through an accretion/dilution model—is essential for evaluating an M&A deal.

Author: Ishaan Nair Updated 4 min read

What synergies mean in an M&A deal

A synergy exists when two combined companies are expected to produce better financial results than they could separately. In shorthand, the combined value of Buyer and Target is greater than their standalone values.

Continue reading with a Guides subscription

Purchase Guides or Guides + Question Bank access to unlock the rest of this article.

View pricing Log in

Continue Learning

Explore more technical interviews guides or practice with the question bank.

More Technical Interviews Guides All Guides Question Bank