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What is Synergy?
Synergy is a concept that says, "the whole is greater than the sum of its parts". It is combining the effort and performance of two companies to accomplish more than the the combination of what each company could accomplish individually. The term is often used in the context of mergers and acquisitions where two companies combine their value and performance to achieve greater financial benefit.
How does Synergy Work?
Two companies may merge to put together their resources and eliminate redundant processes resulting in cost reduction. Synergy is when two merging companies can create more efficiency and revenue by their combined effort.
There are mainly three types of synergies in the context of merger and acquisitions:
- Cost Savings Synergy
- Revenue scaling synergy
- Financial Synergy
Related Topics
- 3 Dimensional Business Model
- What is Strategy?
- What is Business Strategy?
- What is Management Strategy (Strategic Management)?
- Types of Business Strategy?
- Competitive Advantage
- First Mover Advantage Definition
- Organizational Dynamics
- Synergy - Definition
- Business Model Overview
- Business Model Canvas - Explained
- Razor Blade Business Model
- Click and Mortar Model
- Transformative Business Model
- How Management Develops a Strategic Plan
- Mintzberg's 5 Ps of Strategy