Cost vs revenue synergies — which do you trust, and roughly how large are cost synergies?

How to answer

Trust cost synergies. They come from eliminating clear redundancies — overlapping G&A, facilities, duplicate headcount, procurement scale — and are typically sized at about 5-10% of the smaller company's cost base. They are more predictable, faster to realize, and the market credits them more in the price. Revenue synergies (cross-sell, new markets, pricing) are real but slower and uncertain, so buyers discount them heavily. Never anchor a deal's justification on revenue synergies.

Key idea: Cost — ~5-10% of the smaller company's cost base; more credible.