Synergistic Merger

Another term for a complimentary merger. The general justification for synergistic mergers is that the combined companies will achieve greater rates of return and thus increase shareholder value by either:

(a) leveraging the combined assets to ensure better returns; or

(b) eliminating cost duplication, usually by redundancies and layoffs.

As (b) is the most common synergy, the more the word synergy is mentioned by management, the lower employee morale and the higher the merging companies’ CVQ becomes. Contrast with consolidating merger, conglomerate merger, expansive merger, and diversifying merger.