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SYNERGIES (OTHER BENEFITS (not strictly synergies) (Risk mitigation…
SYNERGIES
OTHER BENEFITS
(not strictly synergies)
Increase predictability/reduce cyclicality
Better market knowledge
Better recognition of investment community
Clearer understanding of strategic focus
Bigger size => coverage
Culture: benefit from cross-fertilisation
MORE OFTEN THAN NOT, CULTURE TURNS OUT TO BE AN OBSTACLE
Risk mitigation
Prevent competitor from buying it
What cost of not doing the deal?
Technology hedging
Growth option
Base to create synergies for further acquisitions
Size: access to bigger deals
Talent upgrade
Access to broader, different talent pool
Asset synergies
Working capital benefits
More favorable terms
Receivables
Payables
Lower inventory
PP&E
Rationalise capacity
Divest from underperforming assets
Capture hidden value
Overfunded pensions
Under-utilised property
Break-up value
Cost synergies
Operations
Facilty consolidation
Reduced overhead
Reduced headcount
Reduced cost of logisitics
G&A expenses
Corporate and G&A
IT
R&D
Marketing
Sales
HR
EHS
COGS
Higher efficiency
Re-configuration of assets
Economies of scale
Purchasing effectiveness
Financial synergies
Lower cost of capital
Tax improvement
Increased potential for leverage?
Revenue
External
Access
Geo expansion
Larger share of wallet of existing customers
Cross-selling
economics of scope
economics of density
Access new markets/applications
New verticals
New capabilities
Market dynamics
Offerings
Leveraging new capabilities
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Brand leverage
New products
New services
Internal
Increase sourcing within group