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Premises and Limitations in Defining and Measuring Synergy from M&As

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  • Aevoae George Marian

    ("Alexandru Ioan Cuza" University of Iasi)

Abstract

Mergers and acquisitions are performed worldwide mainly because of synergy. Although many invoke the term synergy as the key motivation of why they engage in M&As, research has led us to understand that it is not very clear in terms of what it actually is. In the scientific literature, synergy is mostly defined as being “2+2=5†. Thus, we first thought that it can only be a positive effect. But, latter on, we found out that synergy is not only positive, it can be negative as well, known as negative synergy or dyssynergy. The purpose of this paper is to shed some light on what is synergy, how can we quantify and classify it and why acquiring firms tend to pay more for the target firm. We believe that there is a link between the amount of premium paid for a target firm and the expectations for synergy.

Suggested Citation

  • Aevoae George Marian, 2017. "Premises and Limitations in Defining and Measuring Synergy from M&As," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 493-498, December.
    • Handle: RePEc:ovi:oviste:v:xvii:y:2017:i:2:p:493-498
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    References listed on IDEAS

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    1. DePamphilis, Donald, 2010. "Mergers and Acquisitions Basics," Elsevier Monographs, Elsevier, edition 1, number 9780123749482.
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    3. Basmah Al Qudaiby & Muhammad Rahatullah Khan, 2013. "Financial Synergy in Mergers and Acquisitions in Saudi Arabia," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(15), pages 181-192, December.
    4. DePamphilis, Donald, 2010. "Mergers and Acquisitions Basics," Elsevier Monographs, Elsevier, edition 1, number 9780123749499.
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    More about this item

    Keywords

    synergy; mergers; acquisitions; dyssynergy;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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