M&A Synergies

Deliver value via inorganic growth

One of the biggest steps in the M&A process is analyzing and valuing acquisition targets. This usually involves two steps: valuing the target on a standalone basis and valuing the potential synergies of the deal. As you execute your company's growth strategy through acquisitions you will reach a number of decision points. From identifying target markets and potential targets to running an efficient transaction process and realising upside or synergy value, we help you confidently navigate the complexities of buying a business, unlocking value at every stage.

When it comes to valuing synergies, there are two types of synergies to consider: hard and soft. Hard synergies are direct cost savings to be realized after completing the merger and acquisition process. Hard synergies, also called operating or operational synergies, are benefits that are virtually sure to arise from the merger or acquisition - such as payroll savings that will come from eliminating redundant personnel between the acquirer and target companies. Soft synergies, also called financial synergies, are revenue increases that the acquirer hopes to realize after the deal closes. They are "soft" because realizing these benefits is not as assured as the "hard" synergy cost savings.

We help identify key risks and rewards throughout the acquisition life cycle, even for the most complex deals. We help you align deals with your strategic business objectives, maintain compliance and enhance value from integration and potential upside opportunity. Our team of specialists helps you focus on the key questions during the critical stages of planning and executing an acquisition.

We blend sophisticated capital markets expertise, with local market presence to negotiate customized financing packages that allow our clients to achieve their goals. We are particularly adept at advising on the following types of synergies:

•     Shared Information Technology: Each company may have proprietary access to information technology that would allow for operational efficiencies if applied or used in the other firm.
•     Supply Chain Efficiencies: Similarly, to information technology, if either company has access to better supply chain relationships, there may be cost savings that the merged firm can take advantage of.
•     Improved Sales and Marketing: Better distribution sales and marketing channels may allow the merged firm to save on costs that were being expensed by each individual firm when they were separate.
•     Research and Development: Either firm may have had access to research and development efforts that, when applied to their counterpart firm, allow for better development or room to cut costs in production without sacrificing quality. For example, one firm may have been developing a cheaper alloy that could be used in the production of an automobile the other firm produces.
•     Lower Salaries and Wages: The merged companies won?t need two CEOs or two CFOs, etc, and this logic applied down the entire organizational chart.
•     Patents: If the acquirer used to pay the target firm a fee for access to its patent, a merge may transfer the right of that patent to the acquirer, thus eliminating that expense.

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•     Patents: Similarly, to the cost-saving effect of a patent, access to patents or other IP may allow the merged firm to create more competitive products that produce higher revenue.
•     Complementary products: Both individual firms may have been producing complementary products pre-merger. These products can now be bundled in such a way to produce higher sales to their customers.
•     Complementary geographies and customers: Merging two firms with varying geographies and customers may allow the merged firm to take advantage of the increased demographic access, producing higher revenue.

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Our experienced team build robust, transparent financial models covering all circumstances and across a wide range of sectors. Our approach is to start with a clear understanding of the situation and design a bespoke model using proven methodologies and techniques. The advantages of our models include creating outputs and usability that are designed specifically for the user, as well as providing the flexibility of assumptions to perform sensitivity analysis.

Our experts partner with clients on corporate planning, providing perspective not only on immediate value and impact, but on long-term implications. We work closely with management and other advisers to leverage and complement their knowledge and ensure maximum impact, and actively support implementation and skill building.