The efficiency gains or operating economies (synergies) that are attained in horizontal mergers or vertical mergers. It reflects the value realized from the additional cash flows generated (or the cash outflows saved) by combining two or more companies. Differently stated, operational synergy refers to the reductions in costs per unit thanks to the increase in a company’s operations both in terms of size and scale. In this sense, operational synergy includes both economies of scale and economies of scope.
September 23, 2022