Give me an example of how you might estimate revenue and expense synergies in an M&A deal.

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IBPrep · Accepted Answer

Cost synergies (bottom-up): (1) Headcount overlap, identify redundant roles (corporate functions, duplicate sales reps in the same territories) and apply average loaded cost per FTE; (2) Facility consolidation, close redundant offices/factories; quantify rent and utilities savings; (3) Procurement, combined volume creates pricing leverage; estimate 2-5% savings on overlapping spend; (4) IT/systems, consolidate ERP and CRM licenses; (5) Public-company costs (if applicable), eliminate one CFO suite, listing fees, audit fees. Revenue synergies (top-down): (1) Cross-sell, (Acquirer's customers) × (% who buy Target's products) × (avg revenue per cross-sold customer); (2) Geographic expansion, Target's products × Acquirer's new geographies × attainable share over time; (3) Channel, apply the acquirer's distribution muscle to the target's products.

Give me an example of how you might estimate revenue and expense synergies in an M&A deal.

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