Synergy

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Dictionary Says

Definition of 'Synergy'

The idea that the value and performance of two companies combined will be greater than the sum of the separate individual parts.
Investopedia Says

Investopedia explains 'Synergy'

This term is used mostly in the context of mergers and acquisitions. For example, if Company A has an excellent product but lousy distribution whereas Company B has a great distribution system but poor products, the companies could create synergy with a merger.

Related Definitions

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    Acquisition

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    The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
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  • Sum-Of-Parts Valuation

    Valuing a company by determining what its divisions would be worth if it was broken up and spun off or acquired by another company.
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    • Conglomerate

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    • Takeover

      A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
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    • General And Administrative Leverage

      A variable within a cost benefit analysis of an acquisition where the potential reduction in overall general and administrative expenses of the combined company are considered. Through ...
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    • Congeneric Merger

      A type of merger where two companies are in the same or related industries but do not offer the same products. In a congeneric merger, the companies may share similar distribution ...
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    • Strategic Buyer

      A type of buyer in an acquisition that has a specific reason for wanting to purchase the company. Strategic buyers look for companies that will create a synergy with their existing ...
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