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  • Synergy

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    vikasmurty
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    Synergy refers to when two or more entities work together in a way that produces an effect greater than the sum of their individual efforts. It is commonly seen in mergers and acquisitions where the value and performance of the combined company is expected to exceed what each company could achieve alone. Shareholders benefit from synergy if the post-merger share price increases. Synergy can come from increased revenues, combined talent and technology, or cost reductions from eliminating redundancies between the merging companies.

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    Synergy refers to when two or more entities work together in a way that produces an effect greater than the sum of their individual efforts. It is commonly seen in mergers and acquisitions where the value and performance of the combined company is expected to exceed what each company could achieve alone. Shareholders benefit from synergy if the post-merger share price increases. Synergy can come from increased revenues, combined talent and technology, or cost reductions from eliminating redundancies between the merging companies.

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    65 views7 pages

    Synergy

    Uploaded by

    vikasmurty
    Synergy refers to when two or more entities work together in a way that produces an effect greater than the sum of their individual efforts. It is commonly seen in mergers and acquisitions where the value and performance of the combined company is expected to exceed what each company could achieve alone. Shareholders benefit from synergy if the post-merger share price increases. Synergy can come from increased revenues, combined talent and technology, or cost reductions from eliminating redundancies between the merging companies.

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    Presented By: - G.Vikas.

    Murty

    A state in which two or more things work together in a particularly fruitful way that produces an effect greater the sum of their individual effects. Expressed also as "the whole is greater than the sum of its parts."

    Synergy is where a company can form a partnership with another company so that they can work together to maximise output.

    An example of this could be a film working with Facebook to advertise while on the films campaign.

    The concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts. Synergy is a term that is most commonly used in the context of mergers and acquisitions.

    Synergy, or the potential financial benefit achieved through the combining of companies, is often a driving force behind a merger. Shareholders will benefit if a company's postmerger share price increases due to the synergistic effect of the deal. The expected synergy achieved through the merger can be attributed to various factors, such as increased revenues, combined talent and technology, or cost reduction.

    For example

    When the Proctor & Gamble Company acquired Gillette in 2005, a P&G news release cited that "The increases to the company's growth objectives are driven by the identified synergy opportunities from the P&G/Gillette combination. The company continues to expect cost synergies of approximately $1 to $1.2 billionand an increase in the annual sales run-rate of about $750 million by 2008." In the same press release, then P&G chairman, president and chief executive A.G. Lafley stated, "We are both industry leaders on our own, and we will be even stronger and even better together." This is the idea behind synergy - that by combining two companies the financial results are greater than what either could have achieved alone.

    For example

    The 2002 combination of Hewlett-Packard and Compaq was designed to reduce expenses and capitalize on combining Hewlett-Packard's reputation for quality with Compaq's impressive distribution system.

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