What is synergy? What might cause this result? Is there a tendency for management to over- or underestimate the potential synergistic benefits of a merger?

 

Mergers effect can be defined as the conclusive effect of the amalgamated organizations that eventually producers a larger effect compared to an individual organization/firm. Synergy usually occurs when a whole is greater than the sum or the parts, i.e. 2+2= 5 is synergy. Simply put, Its the additional benefit that can be earned after the merger of the firms. Primarily, Mergers are the main reason for the creation of synergy; this may be done through the overlapping the roles and functions in for instance the production and marketing alongside the meshing of various engineering capabilities.

Yes there's a tendency to over-estimate the potential synergistic benefits which may accrue.