Synergies are at the heart of many M&A stories. They justify premiums, support investment cases, and often make the difference between a “good” deal and a “great” one.
But how real are they?
In most transactions, synergies are carefully calculated: cost savings, cross-selling opportunities, operational efficiencies. The numbers are presented with precision, often down to the last basis point.
And yet, they are inherently forward-looking. They depend on assumptions about integration, customer behavior, internal alignment, and execution discipline. In other words: they depend on things that are hard to control.
We often see that the more competitive a process becomes, the more important synergies appear. Not necessarily because they are better understood, but because they help justify a higher price.
At the same time, ownership of synergies is often unclear. The deal team models them. The investment committee approves them. But after closing, responsibility shifts and priorities change.
So the question is not whether synergies exist. In many cases, they clearly do.
The more relevant question is: how much confidence do we really have in our ability to realize them?
And perhaps even more importantly: are synergies a source of value – or a way to explain the price we are willing to pay?
