In many cases, synergy is the cause

In many cases, synergy is the cause. This term refers to the practice of combining business activities to increase performance while decreasing costs. When two businesses have complementary strengths and weaknesses, we notes that merging makes strategic sense.In other cases, mergers occur as a means of diversifying or sharpening the focus of a business. “A company that merges to diversify may acquire another company in a seemingly unrelated industry in order to reduce the impact of a particular industry’s performance on its profitability. Companies seeking to sharpen focus often merge with companies that have deeper market penetration in a key area of operations,” we explain.