* Cost Synergies in Mergers: Cost synergies refer to the potential cost savings and efficiencies that can be achieved when two companies merge. This typically includes increased purchasing power and the elimination of redundancies.
* Increased Purchasing Power: By merging, the companies can combine their purchasing volumes, leading to better negotiation power with suppliers and reduced procurement costs.
* Elimination of Redundancies: The merger allows the companies to eliminate duplicate functions, systems, and processes, leading to significant cost savings.
* Not Potential Synergies: Reduced competition is not a cost synergy; it's a market effect. Sharing marketing channels is more of a revenue synergy than a cost synergy.
* Reference: This categorization is supported by merger and acquisition literature, including studies from the Harvard Business Review and the Institute of Mergers, Acquisitions, and Alliances (IMAA).