Mergers and Acquisitions

(pre-merger value of both firms  +  synergies)

   =   pre-merger stock price

post-merger number of shares

The above equation then can be solved for the value of the minimum required synergies.

The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The practical aspects of mergers often prevent the forecasted benefits from being fully realized and the expected synergy may fall short of expectations.