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Main Finance Terms synergy

synergy



ideal sought in corporate mergers and acquisitions that the performance of a combined enterprise will exceed that of its previously separate parts. For example, amergerof two oil companies, one with a superior distribution network and the other with more reserves, would have synergy and would be expected to result in higher earnings per share than previously.

See alsostrategic buyout
Dictionary of Business Terms
synergy

action of a combined enterprise to produce results greater than the sum of the separate enterprises. For example, a merger of two oil companies, one with a superior distribution network and the other with more reserves, would have synergy and would be expected to result in higher earnings per share than before.


Related Terms:
Dictionary of Finance and Investment Terms
strategic buyout

acquisition based on analysis of the operational benefits of consolidation. Implicitly contrasts with the type of takeover based on "paper values" that characterized the "merger mania" of the 1980s-undervalued stock bought using junk bonds ultimately repayable from the liquidation of acquired assets and activities. A strategic buyout focuses on how companies fit together and anticipates enhanced long-term earning power.


Referring Terms:
strategic buyout


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synergy