It’s often said that two heads is better than one, but when it comes to synergy, one plus one equals three. Synergy is more than a corporate term; in fact, synergy is a naturally occurring phenomenon seen in nature. For example, sea anemones and clownfish have a synergic relationship: the clownfish keep the anemones’ predators away, and the anemones keep the clownfish’s enemies at bay.
Whether naturally occurring in nature or being forged in a corporate setting, synergy creates a powerful entity that is greater than the individual working parts.
In corporate settings, synergic relationships have historically shown signs of growth. Take for example Horizon 2020 and the European Structural and Investment Funds. Through this relationship, powerful strategies have been formed that have significantly impacted the economy. Many serial acquirers have M&A incorporated in their core growth strategy. ADP, a provider of HRM software and services, is a very good example of a successful serial acquirer. ADP was able to sustain over 20% CAGR through a number of acquisitions over a 10 year period. ADP acquired 11 businesses in 2007 alone.
These are just a few examples of huge shifts that defined amazing success, and all of these deals had something in common other than big money and boardroom deals: synergy. All of these companies recognized the power that could be theirs when a merger was forged.
In this site and follow up articles we will take a look at: a) what different forms synergies can take, b) why certain M&A strategies are chosen and why they create certain types of synergies, c) where the synergies are found, d)how certain synergies are created.