If you’ve spent more than 15 minutes in a mergers and acquisitions (M&A) strategy meeting, you’ve heard it: “This deal unlocks tremendous synergies.” Cue the head nods. Maybe even a standing ovation from the consultants. Synergies, they say, are the secret sauce that will justify the premium you just overpaid. The problem? Unless you have the operational discipline of a military invasion and the cultural finesse of a diplomat, “synergies” are nothing more than corporate fan fiction.
Spoiler alert: Most companies don’t know what they’re doing. Let’s dive into why synergies are the most overpromised, under delivered part of the M&A fairy tale.
The Fantasy of Synergies: Why Everyone Loves the Word
The Boardroom Buzzword Bingo Champion
Synergy is the gold-medal-winning buzzword of every acquisition pitch. It’s vague enough to sound impressive and broad enough to cover the glaring lack of a real value creation plan. If your slide deck is running low on substance, just pepper in “operational synergies” and “cost efficiencies” and watch your audience exhale in relief, as though you’ve just reminded them there’s a point to all of this.
It’s the corporate equivalent of shouting “blockchain” in a tech meeting circa 2016. The magic word. No one dares question it. After all, synergies always sound good—until someone asks for specifics.
The Imaginary Math Behind “Cost Savings”
When people say, “We anticipate $50 million in cost synergies,” what they mean is: “We took last year’s SG&A, multiplied it by a vibe, and rounded up.” These calculations often originate on the back of a cocktail napkin in the first meeting and somehow survive all the way to the board presentation without so much as a reality check.
The assumptions are heroic. Vendor consolidation? Sure, except both companies have locked-in contracts that expire in 2029. Facility closures? Absolutely, right after you explain to regulators why you’re eliminating the only regional hub in that territory. It’s math driven by aspiration, not operations.
The Echo Chamber Effect
Here’s how synergy hype truly blossoms: The bankers want the deal to happen. The consultants want the implementation work. The executives want their bonuses. So, everyone agrees that the synergy numbers make perfect sense. Before long, you’re sitting in a room where everyone is high on their own projections, and the phrase “stretch goal” is getting tossed around like confetti.
This is less due diligence and more group delusion. But hey, if everyone agrees it’ll work, it must, right?
Why Synergies Rarely Survive First Contact with Integration
Culture Clashes (a.k.a., Why Dave From Accounting Quits)
You can integrate systems and consolidate vendors all you want, but if you underestimate the culture clash, congratulations—you’ve just purchased an HR disaster. All those cost-saving synergies melt away when half your top performers resign during the transition because they hate the new regime.
The problem is, Company A thinks it’s acquiring Company B, but Company B thinks it’s merging with Company A, and neither side is prepared to compromise on how they do things. What starts as a synergy play quickly devolves into a passive-aggressive turf war over Slack channel naming conventions.
System Incompatibility: “We’ll Just Merge the CRMs!” (LOL)
Perhaps the most tragically hilarious assumption in the synergy mythos is the idea that merging IT systems is straightforward. You can almost hear the optimism: “We’ll integrate our customer databases and streamline operations.”
Cue the screaming of the CTO, who explains that one system is custom-coded in an ancient language last spoken by the original developers (who, by the way, retired five years ago), while the other relies on a SaaS platform with zero API compatibility. Best of luck making those “efficiencies” materialize before the next fiscal year.
The Real Cost of Chasing Phantom Synergies
Here’s the part they don’t put in the deal model. For every dollar you think you’re saving through synergies, you’re quietly hemorrhaging another two trying to force them into existence. You’re paying out retention bonuses to prevent your best people from bailing during the integration (which they do anyway). You’re hiring consultants to untangle the mess that was supposed to “optimize” itself. And you’re rebuilding systems you thought would magically connect through sheer willpower.
Meanwhile, the market isn’t waiting for your transition to wrap up. While you’re busy squeezing blood from this stone, your competitors are poaching your distracted sales teams and luring away your confused customers. But hey, at least you have those PowerPoint slides about “capturing value.”
And let’s not forget the talent burnout. The same employees you tasked with delivering these “synergies” are working double shifts trying to keep the business running while also learning how to use a different invoicing system that crashes every third login. Nothing screams “efficiency” like demoralizing your workforce.
The Times Synergies Actually Work (Yes, It’s Rare)
Operational Overlaps That Actually Make Sense
Occasionally—rarely—you’ll find operational redundancies that aren’t just theoretical. Two companies running identical logistics operations in overlapping territories? Sure, maybe consolidating those actually delivers savings, provided you can navigate union negotiations, regulatory filings, and customer transition plans without torpedoing service levels.
But these are the exception, not the rule. Most “overlaps” identified in the deal room are either functionally different, mission-critical, or held together with duct tape and the prayer that no one notices until after close.
Complementary Capabilities, Not Copy-Pasted Functions
The real magic happens when the companies bring different strengths to the table. Maybe one has industry-leading R&D while the other has unparalleled distribution. When done right—and that’s a big if—those kinds of complementary synergies can be transformative.
But, and let’s be clear, this only works when egos are checked at the door, and the integration is treated like a strategic operation, not a quick numbers play. Otherwise, expect your shiny new capabilities to be buried under layers of infighting and organizational chaos.
How To Stop Lying to Yourself About Synergies
It starts with accepting that “synergy” is not a strategy. It’s a potential outcome, contingent on rigorous operational planning and merciless self-skepticism. Next time someone throws a synergy number on a spreadsheet, don’t just nod and move on. Demand to see the operational model, the assumptions, the resource plans, and the track record of the teams who are supposed to deliver this miracle.
Benchmarking is mandatory. Look at similar deals in your industry. How often did promised synergies materialize? What percentage of them arrived on time? Spoiler: The numbers are not on your side.
And perhaps most importantly, interrogate the easy wins. If it sounds too good to be true—like cutting 30% of overhead without impacting service quality—it is. Ask hard questions. Keep asking them. Then ask them again.
Synergies Are the Tooth Fairy of M&A — Until Proven Otherwise
In the grand tradition of corporate mythology, synergies rank right up there with “seamless integrations” and “turnkey solutions.” They sound great. They look fantastic in investor decks. But unless you’ve got a team with the operational chops to execute them and the courage to challenge your own assumptions, synergies are just a bedtime story you tell shareholders to help them sleep at night.
So, the next time someone at the table promises “tremendous synergies,” do us all a favor. Ask for the receipts. Demand proof. And remember: in M&A, the real value isn’t in what you say you’ll save. It’s in what you can actually deliver without burning the whole thing down.
