Seeking for synergies is a nearly ubiquitous feature and motivation of corporate mergers and acquisitions and is an important negotiating point between the buyer and seller that impacts the final price both parties agree to; see Mergers and acquisitions § Business valuation.
[citation needed] A cost synergy refers to the opportunity of a combined corporate entity to reduce, or eliminate expenses associated with running a business.
Cost synergies are realized by eliminating positions that are viewed as duplicate within the merged entity.
This leads to companies sometimes trying to reduce costs too much and make that their main goal after merging, which was found in the study from McKinsey.
Corporate synergies due to mergers result in larger firm size which is perceived[by whom?]
This is because of the executives' view that the advantages that synergies bring along are their job, so their thinking is distorted rather than focusing on the most important aspects.
A 2012 survey by Bain & Company found that overestimating synergies was the second biggest cause of post-deal disappointment.