Identifying synergies ahead of mergers and acquisitions

Dodo zu Knyphausen-Aufsess, Jens Koeppen and Lars Schweizer

International Journal of Financial Services Management, 2007, vol. 2, issue 4, 344-360

Abstract: Most merger and acquisition activities destroy value. One reason for this is that acquisition premiums tend to be too high in relation to the synergies that motivated the premiums paid. In this paper, we illustrate the performance implications of overstated synergies and develop a ten-step reference model for the calculation of synergies in order to avoid overestimating their potential. After that, we present three case studies in which we assess how synergies are determined in practice and compare this to our reference model.

Keywords: acquisition premium; mergers; acquisitions; synergies. (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijfsmg:v:2:y:2007:i:4:p:344-360

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