Mergers and acquisitions are frequent phenomena in everyday business activities (Holtström, 2008). For a merger or an acquisition, expected synergy is of fundamental importance. The synergy-concept emerged in the business strategy literature in the 1960s and has since then gained immense influence as a strategic tool for CEOs and company boards. In both theory and practice, synergy describes value creation of some kind (Pernod Ricard, 2008; Arya, 2002; Rozemeijer, 2000; Tapper, 1999; Larsson & Finkelstein, 1999; SvD, 1998; Olsson, 1997; Chandler, 1992; Trautwein, 1990; Porter, 1987; Rydén, 1971; Ansoff, 1965). Having a business network structure perspective as point of departure, we assume that mergers and acquisitions will involve and integrate not only the acquirer or the acquired company but also connected companies such as customers and suppliers (Holtström, 2008; 2003; Öberg, 2008; 2004; Dahlin, 2007; Öberg & Holtström, 2006; Anderson, Havila & Salmi, 2000; Havila & Salmi, 2000; Bengtsson, 1994).
Synergy as concept (cf. Goold & Campbell, 1998; Itami, 1987; Lubatkin, 1983; Ansoff, 1965) is in this paper further developed and extended to comprise also synergy in the integrating companies’ business network. The paper aims to develop a framework to describe synergy in business relationships with customers and suppliers. To achieve this we first need to analyse how synergy is realised within a company. The analysis is based on a case study of mergers and acquisitions among industrial companies having business in Sweden.
Our findings indicate that within a company synergy is the result of the interplay between creation of value, alignment between strategic prioritisations and functional performance. Thus the integrating companies are at the core. The application of synergy in the M&A-companies business network is to include also their business relationships with other actors. So in a second analysis, we show that synergy in business relationships can be seen as the result of how companies a) adapt to changes in the business network, b) how the changes affects interdependency among actors, c) to what extent there is a co-ordination of activities between actors, but most importantly d) how this is carried out over time.
The resulting framework on connected synergy, combines the perspectives on synergy described above with also the development over time. Within the M&A-companies, two forms of synergy appears; (i) planned in the early phases of integration and, (ii) emerging over time. In the M&A-companies’ business relationship synergy can appear as (iii) something planned by the integrating companies to purposely influence other actors and, (iv) developing when different actors adapt to these changes over time.