Question

What are the primary differences between operating synergy and financial synergy?

What are the primary differences between operating synergy and financial synergy?

Homework Answers

Answer #1

In the context of mergers and acquisitions,

financial synergy is related to more value created interms of increased cash flows,increased revenues, increased profitability and improved cost of capital after the merger or acquisitions

Operating synergy is related more towards improving operating activities of combined entity or individual companies through mergers and acquisitions, it is linked towards achieving economies of scale and scope,exploring new products and new markets, increased process efficiency etc

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