Synergy is
1) The difference between the EQUITY VALUE of the combined company and the EQUITY VALUE of the individual company or;
2) The difference between the TOTAL VALUE (Debt+Equity) of the combined company and the TOTAL VALUE of the individual company?
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Synergy(Merger and Acquisiton)
9y ago#1Synergy is neither!!!
Synergy results from the fact that by combining two companies they are able to increase the total revenue or (more likely) to reduce the total costs - hence more profit. This is Paper P3.
The measure of the benefit of synergy to investors is the increase in the total market value of the new company (and the benefit will go to the shareholders).
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