Synergy Trap

Advanced 💼 Corporate / Business

Definition

The illusion that combining two companies will create value through elimination of redundancy and cost-sharing. Usually results in the opposite—chaos, talent loss, and duplicate spending.

Example Usage

We fell into the synergy trap with that acquisition, thinking we could consolidate operations and save millions.

Origin

Criticism of synergy-based M&A strategy; popular term in post-acquisition analyses

Fun Fact

80% of acquisitions fail to achieve projected synergies, yet companies continue pursuing synergy-based deals

Source: M&A and corporate strategy analysis

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