Cost acquisition synergy

Cost synergy can arise from eliminating duplicated functions, purchasing more efficiently or sharing facilities. Estimate the avoidable cash savings, timing and tax effects, and deduct implementation, redundancy, technology and other integration costs. Some apparent savings may be accounting allocations rather than cash reductions, and operational disruption can offset the projected benefit. A buyer should not count the same saving in both stand-alone and combined forecasts. Whether acquirer shareholders benefit also depends on the price and financing of the deal.