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M&A Synergy Map

L1Business analysisGrowth and portfolioquantitativeStages 3 to 5

Reference model

The M&A synergy mapThree sources of synergy add value: cost synergies, revenue synergies and capability and financial synergies. Dis-synergies and integration costs take value away. The net present value of the risk-adjusted net synergies is the most a buyer should pay above the target’s standalone value, the premium.SYNERGIES ADD VALUECost synergiesOverheads and duplicate teamsPurchasing and plant useThe most reliableRevenue synergiesCross-sellingNew markets and pricingThe least reliableCapability and financialKnow-how and technologyTax, lower cost of capitalIn betweenTHESE TAKE VALUE AWAYDis-synergiesCustomers lost · people lostManagement distractionIntegration costsSystems, redundancy, advisersOne-off cost to achieve each synergyNet value of the synergies = benefits × probability − dis-synergies − costs, discountedPay no more than this above the target’s standalone valueA premium above the net synergies hands the seller value the buyer has still to create.

Cost, revenue and capability synergies add to the target’s value; dis-synergies and the cost of integration take away from it. Pay no more than the net.

About this model

An acquisition creates value only if the combined business is worth more than the two apart, and only if the buyer does not hand all of that gain to the seller in the price. The synergy map lists where the gain would come from, how likely it is, what it costs to achieve, and what it is worth against the premium.

Michael Porter, Mark Sirower and Aswath Damodaran on valuing synergy (Competitive Advantage; The Synergy Trap; Investment Valuation) · 1985–2012

How to read it

  • Cost synergies (overheads, purchasing, plant use) are the most reliable; revenue synergies (cross-selling, new markets) are the least. Capability and financial synergies sit between.
  • For each synergy, put an annual value at full run-rate, the chance of achieving it, when it begins, and any one-off cost to achieve it. Dis-synergies (customers lost, people lost, distraction) are entered as positive losses.
  • The net present value of the synergies is the most you can justify paying above the target’s standalone value. If the premium is higher, the buyer pays the seller for value it will have to create itself.

What this does

Screens a potential acquisition target for where real synergy — cost, revenue, or capability — would actually come from, before a term sheet gets drafted.

When to use it

Growth through Maturity, once Make-Buy-Ally has pointed toward 'buy' and a specific target is on the table.

Not when: Before there's an actual target on the table — this maps synergy for a specific acquisition, it isn't a general M&A-readiness check.

What happens next

Confirmed synergies feed the Financial Model's deal valuation (DCF/NPV).

Golden thread

Builds on ←

  • makebuyally

Feeds into →

  • financial

Framework library: Strategy and environment (layer L1), lifecycle stages 3 to 5.

Use this tool, free

Sign in to open the worksheet. Your work saves as you type, the AI can draft the parts you have not filled in, and you finish with an analysis and a 30/60/90-day action plan.

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Hand-built by Eccellere and reviewed by Eccellere on 02/11/2026. Guidance, not advice: apply your own judgement.