Synergy

Synergy occurs when two things work together to create an effect greater than the sum of their individual effects. Many acquirers count upon the synergy effect to justify an acquisition. For example, the sales departments of the acquirer and the acquiree can sell each other's products, resulting in more sales than each business would have individually generated. Or, the administrative staffs of the acquirer and the acquiree can be merged, resulting in layoffs of redundant personnel to reduce costs.

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