Give me some examples of cost synergies.

Examples of cost synergies include:

  • Increasing operational efficiency to improve margins
  • Eliminating redundant expenses; saving costs on finance, IT, etc. by applying best practices
  • Economies of scale: spreading fixed costs (ie operating expense) over a larger revenue base and reducing fixed costs as a % of revenue
  • Vertical integration of supply chain = removing markups on products
  • Access to competitive operational advantages: tech, infrastructure, skilled employees
  • Tax benefits: location of company has lower tax rate
  • Net operating losses: benefit for unprofitable companies
  • Reducing variable costs (ie cost of goods sold or cost of sales) by increasing bargaining power with suppliers and / or vendors