What might a buyer focus on when determining synergies in a merger?

A buyer focuses on reducing operational costs and increasing efficiency when determining synergies in a merger because these factors directly impact the profitability and effectiveness of the combined entities. By identifying areas where redundancies can be eliminated—such as overlapping functions, shared resources, or economies of scale—the buyer can calculate the potential cost savings that would result from the merger. This focus on operational improvements often leads to a more streamlined organization and ultimately contributes to increased financial performance.

While identifying new markets, creating branding strategies, and expanding the workforce are also important considerations in a merger, they typically relate to growth strategies rather than immediate cost efficiencies. Operational synergies often represent a more quantifiable and immediate benefit that can significantly enhance the overall value proposition of the merger for the buyer.