LBO Question - Synergies
Why are some reasons you would include synergies (with another portfolio company) in an lbo model?
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A big line item would be recurring expense reductions associated with synergies in areas such as logisitics, IT integration, procurement, store operations, distribution, overlapping job functions, etc.
It really depends on the relationship between the entities, horizontal vs. vertical? do a google search
By redundancies what we're really talking about is firing people so that one person does the same amount of work or slightly more work than they did before, as opposed to two people doing that work. Saving money with wage economies of scale, synergy.
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