The Synergy Limitation Paradox

How can a firm avoid a failed acquisition—i.e., one in which it does not recover its costs?
Kathryn Rudie Harrigan  | Fall 2012
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This note examines the premise of the “Synergy Trap” wherein firms find that the acquisition synergies that are available from combining firms are often smaller than had been expected and difficult to achieve. In exploring this phenomenon, this note outlines a framework by which managers can analyze the postacquisition status of a newly formed entity and plan for performance improvements that will recoup any acquisition premiums paid.

Case ID: 120409

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