Conference Magazine - GoingPublic.de - Deutsches Eigenkapitalforum

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Figure 1: Challenges of synergy valuation
Pre-Closing
Post-Closing
1
Source: RölfsPartner
Acquisition Goals
Strategic
motivation /
“deal logic”
4 5
Bottom-Up Evaluation of Synergies
Sales synergies
Synergy potentials
Realisable synergies
Post-merger integration as a starting point for
realisation of synergies
At post-closing it is often misleadingly assumed that anticipated
synergy potentials automatically arise and thus help
the companies involved to create additional value.
Although during a pre-closing phase, synergy potentials are
often determined in a theoretically correct way, in the
course of integration they are either not exhausted in full,
only with a delay or not at all. This can be regularly attributed
to a lack of responsibility, the number of staff assigned
to realising synergy potentials or employees are busy running
the daily business. Occasionally, the assigned teams
also lack the specific competence and experience to
successfully enforce the actual realisation of synergies.
This requires a synergy management team solving the
problem of realising synergies by consistently defining and
implementing, as well as constantly monitoring, the necessary
measures. Synergy controlling also has to enforce
appropriate amendments, if required. Accordingly, efficient
Page 66 Deutsches Eigenkapitalforum 2012
2
Stand-alone
(buyer's
perspective)
Top-Down Valuation of Synergies
Quantification of synergy potentials
(financial, cost and market synergies)
Unreal
synergies
Real
synergies
Real
individual
synergies
Synergy Management
Transfer into a
quantifiable
controlling system
(synergy management)
synergy management ought to take into account the following
aspects:
• Determination of objectives and responsibilities
• Assignment of detailed measures to each identified synergy
potential
• Application of a stringent implementation controlling
process
• Integration into an existing incentive system
Summary
6
3
Determination of Purchase Price
Net
synergy
value
Stand-alone
(buyer's
perspective)
Goodwill
Assets
Risk
premiums
Realisation of Synergies
Purchase price
allocation (closing)
Buyer’s
subjective
value
Impairment
Accurately assessing synergies is regularly a challenging
task in the M&A process, as forecasting synergy effects is
complex and, indeed, unique to each M&A transaction. In
many cases the success of a transaction is significantly
determined by evaluating synergies with a sense of proportion
concerning the probability of realisation, defining an
appropriate acquisition premium, as well as con sistently
implementing an efficient synergy management process.
t 1
Negotiation
result
?
Purchase
price
t 2