Business owners are increasingly considering their timelines and options for a business transition. Consistent with prior years, that transition event is frequently a sale due to supply and demand factors. The majority of businesses are owned by baby boomers who are rapidly approaching the age of retirement. A financial crisis and pandemic in the last 15 years have taken their toll. On the demand side, record levels of cash on corporate balance sheets and the unprecedented amount of debt and equity capital needing to be invested have resulted in an attractive environment for many businesses in which to evaluate their alternatives. If you’re thinking of selling your business—either now or in the future—be prepared to show buyers the synergistic fit with your company. Make it clear that there is more to offer than the expense reductions achieved by running two businesses as one. It will further help you to make your case by understanding how the current environment is dramatically changing market conditions—forcing many buyers to search for ways to improve the sustainability of their business models and overcome new disruptions, whether in the form of new technology, competition or other forces. Carefully position your sale with these factors in mind—or risk leaving value on the deal table.   The synergies challenge   Often, if M&A synergies are negotiated, the focus is on cost synergies: how the sale will save money/reduce operating expenses for the new entity. The value of revenue synergies usually doesn’t get structured into the deal price. Here’s why: Cost synergies, such as reducing headcount or eliminating duplicate facilities, are easier to anticipate and quantify. Such actions are also within management’s control, so there’s a greater probability of achieving results, and in a shorter timeframe after the deal closes. This is especially true when the buyer is publicly traded and must justify the value of a merger or acquisition to shareholders. To calculate future financial performance (i.e., the run rate), companies typically project the value of expense-saving synergies and give less attention to those that build sales or enhance market position. Revenue synergies are more difficult to quantify, in part because success is heavily dependent on others: the buyer (i.e., post-merger integration success) and various third parties (customers, resellers, competitors). Also, the value of revenue synergies, such as entering new markets, enhancing technological capabilities and adding complementary product sets, typically takes longer to realize. And the longer it takes and the more challenging to achieve, the less likely the seller will receive a share of the potential value. Timeline of operating synergies