Such synergies are usually critical to paying for the deal and realizing its near-term value in the capital markets. Since cost synergies are usually communicated to investors and are relatively easy to estimate, they are often factored into the price of the stock once investors are confident that the deal will close.
However, achieving cost synergies shouldn’t come at the expense of potential revenue synergies that can add to the top line over the medium and long term. Revenue synergies are much harder to capture than cost synergies, but they are equally—if not more—important for both financial and organizational reasons.
In order to continue to create shareholder value, an acquirer has to deliver synergies above and beyond expected cost savings. A PMI offers a unique occasion to identify and pursue new opportunities for growth—for example, by cross-selling products, bringing existing products and services into new channels or geographies, or leveraging an improved cost structure to target new customer segments.
In addition, when a PMI is put into the context of a credible and compelling growth story, that story can be an excellent catalyst for employee engagement and motivation. If people in the organization are convinced that the PMI is a step on the way to an exciting future, they are generally more willing to accept the tough decisions that are necessary to get there.