Glossary
Synergies
The additional value a buyer expects to create by combining two businesses: revenue synergies from cross-selling and winning larger work together, and cost synergies from shared overheads.
In plain English
Synergies are part of why a strategic buyer may pay more for a business than a financial buyer would. A group that can sell the acquired agency's capability to its existing clients, or offer the acquired agency's clients a wider service, sees value that the business does not have on its own.
Buyers rarely pay for all the synergies they expect, but understanding which buyers have the most to gain is central to identifying the right ones.
Why it matters
For sellers, synergies are a reason to run a process that reaches the buyers with the strongest strategic fit. For buyers, they are the plan that has to be delivered after completion.
What to watch for
- Be realistic about synergies when valuing an acquisition.
- Integration planning is how synergies are realised.
- Revenue synergies are harder to achieve than cost synergies.
Transaction language and legal treatment depend on the agreement and the jurisdiction. Written by Motion Advisory Partners as general guidance, not legal advice.