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It’s generally possible for an acquirer and its target to attain a higher level of gross sales growth together than both company may by itself. Revenue enhancements are notoriously hard to estimate, nonetheless, as a result of they contain external variables past management’s control. The shopper base of the acquired company, as an illustration, may react negatively to completely different prices and product options. A combined buyer base could bid4paper balk at making too many purchases from a single supplier. And competitors might lower their costs in response to an acquisition. Revenue enhancements are so troublesome to foretell, in truth, that some wise corporations don’t even include them when calculating synergy worth. Matthew Slatter, the CEO of Financial institution of Melbourne, says, We mannequin this income enhancements, however never factor it into the worth.” Equally, Peter Shaw at ICI considers them mushy synergies” and discounts them heavily in calculations of synergy worth.
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