Synergies
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There are different types of synergies. Which is the most common and easiest to manage? When you source for M&A deals, which type of synergy is your top priority?
Among the different types of synergies—cost, revenue, financial, and market synergies—the most common and generally easiest to manage for me are cost synergies.
These synergies are more predictable, can be quantified during due diligence, and are within the control of the acquiring company. This makes them easier to model, measure, and execute post-close.
When sourcing M&A deals, the top priority often depends on strategic intent, but in most cases, revenue synergies are highly attractive because they represent future growth—such as cross-selling, market expansion, and innovation opportunities. However, they are also harder to realize and manage due to execution risks, cultural integration, and dependencies on customer behavior.
Great points—synergies are a key driver of value in M&A, but their types and priorities can vary widely. The most common and easiest to manage synergies are generally cost synergies. These involve savings achieved by eliminating redundancies, consolidating functions, and leveraging scale, such as combining procurement, streamlining operations, or closing duplicate facilities. Cost synergies are typically easier to estimate and realize compared to revenue or financial synergies, which can be more speculative or take longer to achieve.
When sourcing M&A deals, many acquirers prioritize cost synergies because they offer more immediate and predictable returns, especially in consolidations or add-on acquisitions. However, the top priority can shift depending on the deal’s strategic goals. For example, if the main objective is market expansion or product portfolio growth, revenue synergies—such as cross-selling or accessing new customer segments—may become the top priority. Ultimately, the most crucial synergy is the one that best aligns with the acquirer’s investment thesis and value creation strategy for the specific deal.
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