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