Which validation steps help ensure synergy realism in an add-on transaction?

• A. Accept management's synergy estimates without validation.
• B. Validate via integration plans, track records, and credible timing; cross-check with management's track record and realistic milestones.
• C. Rely on public comps only.
• D. Use random synergy numbers.

Answer: (B)

Synergy realism in an add-on transaction comes from tying expected benefits to a concrete integration plan and achievable timing, then checking those expectations against what the management team has actually delivered in the past. By laying out integration steps, required investments, and milestones, you force a disciplined view of how the synergies will materialize and when. Looking at management's track record provides evidence about whether they typically deliver such synergies, and aligning the plan with credible timing helps prevent optimistic projections that can’t be realized. Together, these steps create a defensible forecast and reduce the risk of overstatement.

Why other approaches fall short: accepting estimates without validation invites execution risk and mispricing; relying only on public comps gives external benchmarks but not the internal feasibility of the specific deal; using random numbers offers no basis for credibility or valuation.