Synergy mainly comes from the following three aspects:

First, the scope economy: the interactive extension of the core competence of the acquirer and the target company. 　

Second, economies of scale: the unit cost of the combined product will decrease with the expansion of procurement, production and marketing. 　

Third, process/business/structure optimization or reorganization: reduce the savings caused by repeated jobs, repeated equipment and workshops.

Mark Sirower once gave a formula to judge the value of M&A: the value of M&A strategy = synergy-premium.

The so-called premium is the price paid by the acquirer beyond the intrinsic value of the company. If the premium is zero, then M&A value = synergy. If there is no synergy, then the M&A premium is a gift from the acquirer to the target company. 　

One of the biggest challenges of M&A strategy is that the premium paid is fixed beforehand, but the synergy effect is highly uncertain. Once the M&A strategy fails, the cost is high, whether it is money or reputation. 　

Therefore, in a mature capital market, two key indicators for shareholders or investors to judge the impact of a merger on their own interests are the potential synergy and the merger premium. When the bid of the acquirer is much higher than the intrinsic value of the company, and the premium is not supported by potential synergy, investors, the public and other stakeholders will doubt the M&A motivation of the acquirer. If the acquirer can't give a proper explanation, this doubt will be regarded as a fact by investors. When M&A involves international political factors, this kind of M&A will provide skeptics with a worthy reason. In a sense, CNOOC's acquisition of Unocal fell into this trap.

There is great uncertainty in the synergistic effect, but it is not without trace. It may be impossible to explain it clearly in one sentence or two, but everyone has a general impression of synergy, and its purpose is either cost advantage or resource integration effect that can improve its position in the industry. However, in practice, there are few successful cases through synergy, so synergy seems to be just a beautiful idea. < /SPAN> < /p>