Title: Identifying synergies ahead of mergers and acquisitions

Authors: Dodo zu Knyphausen-Aufsess, Jens Koeppen, Lars Schweizer

Addresses: Otto-Friedrich University of Bamberg, Feldkirchenstrasse 21, 96045 Bamberg, Germany. ' AlixPartners GmbH, Konigsallee 53-55, 40212 Dusseldorf, Germany. ' Johann-Wolfgang-Goethe-University Frankfurt & Grenoble Ecole de Management, Mertonstr. 17, D-60325 Frankfurt am Main, Germany.

Abstract: Most merger and acquisition activities destroy value. One reason for this is that acquisition premiums tend to be too high in relation to the synergies that motivated the premiums paid. In this paper, we illustrate the performance implications of overstated synergies and develop a ten-step reference model for the calculation of synergies in order to avoid overestimating their potential. After that, we present three case studies in which we assess how synergies are determined in practice and compare this to our reference model.

Keywords: acquisition premium; mergers; acquisitions; synergies.

DOI: 10.1504/IJFSM.2007.016289

International Journal of Financial Services Management, 2007 Vol.2 No.4, pp.344 - 360

Available online: 15 Dec 2007 *

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