# Synergies

Value created by combining businesses — cost synergies remove duplicated expense; revenue synergies grow the top line.

Synergies are the additional value created by combining two businesses. Cost synergies remove duplicated expense — consolidating overhead, facilities, or systems — while revenue synergies grow the top line through cross-selling, expanded reach, or a broader product set. Together they form the case for many acquisitions.

The two are not equally reliable, and underwriting them as if they were is a common error. Cost synergies are largely within management's control and land relatively quickly; revenue synergies depend on customer behavior, arrive later, and often disappoint. Prudent deal models discount revenue synergies more heavily than cost synergies rather than crediting both with equal confidence.

### Commonly confused

Underwriting revenue synergies as confidently as cost synergies. Revenue synergies are far less reliable and land far later.

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