Sharing synergy value with sellers
Abstract: When a business acquisition results in postmerger synergies — such as reduced operating expenses — the savings typically are considered the buyer’s reward for negotiating a good deal. However, buyers may want to consider cutting sellers in on their synergy-derived savings. As this article contends, not only could “sharing the wealth” improve price negotiations, but it also might ease the postmerger integration process by providing sellers with incentives to assist in the transition process. A sidebar notes that there are two broad categories of synergies.