Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Synergistic Buyer

Definition

A company buyer that brings leverage, or synergies, to a transaction through increased revenues or decreased costs that result from the pooling of two companies’ strengths.

Example

Apple is a synergistic buyer of Beats headphones. By purchasing Beats, Apple can sell the headphones in its online store and in all retail Apple stores. As a result, the revenue of Beats should dramatically increase as a result of being purchased by Apple.

Tips

Synergies normally result in increased revenue or decreased costs. Buyers of companies share the amount of the synergies with sellers of a business based on the probability of receiving them. Increased revenues are riskier to a buyer and therefore share less of these synergies with sellers of a business than those resulting from a decrease in costs, which is less risky.

Related Resources

M&A Guide | The 4 Types of Buyers of Businesses

Why do companies acquire other businesses?

M&A Guide | Selling Your Business to a Competitor