Synergies That Deliver
The gap between forecast synergies and realised synergies separates competent acquirers from everyone else.
The investment memo
£3M in cost synergies projected.
Eighteen months later: £800K materialised. Headcount down. Systems consolidated. Vendor contracts renegotiated.
The P&L impact is a fraction of the forecast. This isn’t dishonesty—it’s that identifying synergies and delivering them are different problems.
Where the gap lives
Implementation costs eat the benefit. Platform migration: six months, £400K in consulting fees. Eliminating duplicate roles: severance. Vendor renegotiation: 15% discount, but three-year commitment. By the time you account for transition costs, net benefit is half the slide.
Timing assumptions prove optimistic. The plan says consolidate HR systems by month six. Data migration takes nine months. Parallel running extends to month twelve. Full adoption, month eighteen. You get the benefit eventually—but a year late. Discounted back, that changes the economics.
Assumptions don’t hold. The memo assumes you can eliminate one sales ops team because territories don’t overlap. In practice, the acquired business serves different customer segments with different workflows. Forcing consolidation breaks both. You keep 70% of the duplicate cost because the work is genuinely different.
Revenue synergies fail more often
Cross-sell looks obvious on slides. Sell acquired products to existing customers, existing products to acquired customers. The logic makes sense.
Sales teams resist. They were hitting quota selling three products. Now you want six, half of which they don’t understand, to customers who didn’t ask. Unless the incentive is substantial and training excellent, they’ll keep selling what they know.
Customers don’t care about your portfolio. They bought your product because it solved their problem. The acquired product solves a different problem, often for a different buyer in the same organisation. That takes new relationships, different buying processes.
Products don’t bundle cleanly. Pricing model differs. Implementation complexity differs. Support requirements differ. Forcing bundles creates friction. Test this early. If bundling doesn’t improve close rates or reduce CAC, the revenue synergy is fiction.
What actually delivers
Synergies that materialise are specific, measured, and owned.
Specific: Point to the line item. Not “reduce overhead”—“eliminate duplicate UK HR roles, saving £180K annually.” Not “cross-sell opportunities”—“sell product X to 20% of acquired customer base in segments Y and Z.” Vague synergies don’t get delivered.
Measured: Track realisation against forecast. Monthly. The integrations that deliver synergies treat them like any other P&L target. The ones that don’t mention synergies once in month one and never track them again.
Owned: Someone’s bonus depends on it. Cost synergies get delivered when the CFO owns them with explicit accountability. Revenue synergies get delivered when a sales leader has cross-sell in their comp plan. Without ownership, synergies stay on slides.
Good acquirers also know which synergies to ignore. Platform consolidation costing more than it saves? Don’t do it. Cross-sell requiring 200 salespeople retrained for £500K revenue? Not worth it. Vendor renegotiation saving 10% but locking you in for three years when technology is changing fast? Walk away.
The test
Pull your last acquisition synergy forecast. How much realised? How long did it take? What implementation costs weren’t in the original estimate?
Realisation below 60%? Forecasting is broken. Timing off by more than six months? Assumptions were too optimistic.
For the next one: cut the forecast 30% to account for implementation costs. Add six months to all timing assumptions. Make synergies specific. Assign owners. Track monthly. Ignore the ones that cost more to deliver than they’re worth.
The investment memo should impress the board. The realised synergies should improve the P&L.
Those are different disciplines.
Related: The First Hundred Days · Third Lever · Reading Guide