Illustrative · An industrial acquisition · Not a client engagement

The synergy number in the deck is not the synergy number in the deal.

A deal announces $30.0M of run-rate synergies and the deck values them the easy way. Below, the same synergies priced the way a buyer's board should see them. Decompose the number, then set the ramp to field reality.

Beat 01 · The announced number

The deck takes $30.0M of run-rate synergies, divides by a 10.0% cost of capital, and prints $300.0M of value. Instant, pre-tax, free to achieve, and forever. The bar on the right is that number. This is not a strawman. Divide-by-WACC is how most announcement decks and fairness summaries size synergies.

Beat 02 · Price it like a buyer

Real synergies leak three ways before they reach the shareholder: the taxman takes his share, the calendar delays every dollar while the discount clock runs, and integration sends a bill (here, 0.7x the run-rate). Decompose the bar to see how much of the $300.0M survives.

The read

Announced value
$300.0M
$30.0M run-rate at 10.0%: instant, pre-tax, free
Buyer-grade NPV
$…
Press Decompose
Buyer-grade NPV: what survivesPhased, after-tax cash flows plus the run-rate that remains at year 5, net of the integration bill.
The taxman: $75.0MSynergies are pre-tax in the deck and after-tax in the bank. At 25%, a quarter of the perpetuity never existed.
The calendarSynergies ramp over five years while the discount clock runs. This leak grows as the ramp slows; it is the slider.
The integration bill: $13.8MCost to achieve of 0.7x the run-rate, spent in years 1 and 2, after tax, discounted.

The decision

Underwrite the ramp, not the announcement.

The synergy case that survives diligence is phased, after-tax, and carries its own integration bill. Price the deal on that number, tie management incentives to the ramp, and treat every month of slippage as the valuation event it is. The announcement was marketing. The ramp is the deal.

Pressure-test a synergy case
AIROEDGE SYNERGY MIRAGE · ILLUSTRATIVE ECONOMICS, INTERNALLY CONSISTENT · SIMPLIFIED VIEW. THE PHASED SYNERGY NPV ENGINE IS APPLIED IN ENGAGEMENTS, NOT PUBLISHED.