Estimating synergies is hard. We're looking at the future and we don't have a crystal ball. So we can't accurately work out what our synergies are going to be. However, we can look to the past for some guidance.

The transaction multiples grid can provide valuable data on synergies potentially realized in a deal. If we look here down the left hand side. We've got acquire a target and we've got five different transactions.

The transactions have been done by five different companies companies a b c d and e. This transaction multiples grid calculates EV to LTM sales, EV to LTM EBITDA, but it's the far right-hand column that we're interested in.

These transactions have released details of their synergies as a percentage of target sales.

Now we can get them from press releases, presentations, etcs. Importantly though at the bottom here it says synergies usually drive the amount of premium offered.

So if we're thinking how much should I offer for our company in addition to its current pre-deal price? The synergies really help us out here.

Carrying on reading the bottom it says the relative amount of synergies from previous transactions gives us an important insight to expected synergies in future deals. And when applying percentages from previous deals to estimate syngies cross-check for comparability of margins cost structures and industries. The last thing we want to do is look at a past transaction and take their numbers.

When we find actually that that transaction had very little that was comparable with our transaction.