CandleFocus

Synergy

Candlefocus Editor
Synergy is a term used to refer to situations when the combined effect of two or more entities, either as individual parts or as a whole, is greater than the sum of the parts. The concept is often applied to the business world where two mergers can create a larger, more efficient firm. The additional value created by a synergy-driven merger is called the synergy value and can be used to provide shareholders with a richer return in the form of increased revenue, lower costs, improved productivity, increased market share and higher profit margins. It is believed that when two companies combine, the total value generated from the new entity is often greater than the sum of the original entities.

Synergy merges are most commonly used when a small company has market specific knowledge that may help to significantly grow another organization’s offerings. By leveraging different skills, technology, and talent, the companies can increase their resources and capabilities, creating value greater than the sum of its parts.

In addition to merging with another company, a company can also achieve synergy through internal projects such as combining its products or markets, experimenting with different internal structures, or setting up cross-disciplinary workgroups. By bringing together people from different departments to work together, a company can unearth potential opportunities and bridge the gap between departments. This can lead to improved organizational efficiency and innovation.

Synergy is a powerful concept when applied correctly in business. When two companies merge, the potential synergistic benefits can capitalized on to create a formidable entity that is bigger and better than either of the two original companies. However, it is important to remember that the success of a synergy merge depends not only on the capabilities of each individual company involved, but also on the ability of each company to collaborate as a unified whole.

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