Synergies will result in a more efficient, higher profitable, larger business
Larger more profitable businesses are more attractive to buyers
Higher profits will attract higher multiples on sale
Example:
Two £1m EBITDA business with PE of 6, total value £12m
Merging the business with £0.5m in synergies results in EBITDA of £2.5m, attracting PE of 9, total Value £22.5m, merging creates extra £10.5m of value
