Why Some Merging Companies Become Synergy Overachievers

The open secret about M&A is that most deals fail to generate the synergies companies expect when they announce a merger. In a Bain & Company survey of 352 global executives, overestimating synergies was the second most common reason for disappointing deal outcomes. We took a hard look at synergies in M&A to understand what the best companies do when estimating, announcing and pursuing them. We wanted to see whether merging companies’ announcements matched the synergies that should be expected given their industry, size and initial cost position. Are scale benefits alone justifying announced synergies? Are companies using due diligence and integration planning to improve underlying performance and reduce overlapping costs?

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