What are three areas of synergies? Select 3 answers:
A)Revenue
B)Inventory
C)Quality
D)Cost
E)Management

Question

Quizplus · Accepted Answer

Revenue, Management and Cost are basic buckets of synergies.
Generally, synergies between companies can be divided into three buckets.
Revenue: When the combined product offerings of two companies combine to generate more revenue than the two pre-merger companies. This could be through economies of scope or cross-promotional considerations.
Cost: In general, a larger company will have cost advantages due to economies of scale and elimination of duplicate entities. For instance, you might only need one office or e-mail system.
Management: If skill sets are complimentary, say a great technical team combining with a great leadership team, then there is a potential synergy. More often though, you have just the opposite. Culture clashes and strong employees choosing to leave (many because they are cashing in on the acquisition) are just the beginning of team-related problems after M&A.
Key Takeaway: Take each of the three categories and make a list of what falls within them. For instance, information technology synergies come primarily in cost. Remember Revenue-Cost-Management for your case interviews where this inevitably comes up.

What Are Three Areas of Synergies? Select 3 Answers