Every time one company launches a takeover bid for another, the justification is always about synergies. The more and bigger they are the better the deal. Microsoft’s recently announced $26 billion all cash offer for LinkedIn is the latest case in point. The CEOs of both companies and the media have all focused on the synergies in communicating and discussing the deal.
But this “sum the synergies” approach to evaluating deals is highly problematic. All too often acquirers make big claims about synergies that they fail conspicuously to achieve, at least that’s what the track record in M&A suggests.
