What is a potential benefit of achieving cash flow synergies?

Achieving cash flow synergies primarily results in higher combined cash flows, which can stem from either cost savings or revenue enhancements. When two companies merge or collaborate, they often find ways to eliminate redundancies—such as by consolidating operations or streamlining processes—leading to reduced costs. Additionally, they may harness combined resources to enhance revenue, such as through cross-selling products or entering new markets more effectively. This increase in cash flow is a direct benefit of the synergies realized from the merger or acquisition, as the combined entity can generate more cash than the two firms could separately.

The other options, while they might be associated outcomes in some cases, do not specifically capture the essence of cash flow synergies. For instance, operational risk reduction can occur, but it is not the primary focus of cash flow synergies. Similarly, while employee engagement might improve due to more efficient operations or greater resources, it is not directly related to financial synergies. Lastly, while there may be instances where a merger or acquisition reduces the need for further investment, this does not directly relate to the generation of higher combined cash flows, which remains the hallmark of cash flow synergies.