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Revenue Synergies: An imperative in CPG deals

With deal valuations still high and a potential recession on the horizon, consumer packaged goods companies need to do more than cut costs to drive transaction value.

The revenue synergy imperative

Deal value justification is about to get more challenging.

Valuations in the consumer packaging goods (CPG) sector have been supported to date by strong, traditionally cost-focused synergies. But it will likely get harder to squeeze efficiencies out of combined entities in a tougher environment.

These familiar cost reduction M&A strategies in the consumer packaging goods (CPG) sector are mature and, as a result, less effective for organizations that are already running lean and heading into a less-hospitable, lower-profit environment. The results of cost takeout alone can’t justify valuations. Revenue synergies, in turn, have become more critical.

Cost synergies: Important but exhausted

Reducing costs and driving efficiency isn’t enough to support the high multiples being paid.

Tried and true cost synergies have successfully boosted multiples, and with the additional tactics discussed in our paper "Winning in M&A:  Best practices from leading consumer companies,” organizations have the opportunity to drive as much value as possible by:

  • Announcing the details of synergy expectations and plans before the transaction close;
  • Publicly tracking and reporting synergy progress post acquisition; and
  • Capturing a significant portion of synergies quickly, usually within the first year.

The challenge of creating value from M&A remains, and the benefits of these tactics applied to cost takeout hold true. But in the current environment, transactions must be accretive to the new parent company in order to support continued high multiples in the consumer and retail space.

Revenue synergies: Effective and underutilized

Corporates and private equity are finding that revenue synergies are an increasingly necessary component of value creation, yet they are not as widely leveraged or emphasized in dealmaking as cost synergies.

Revenue synergies ranks #1 among the most significant M&A value drivers, according to C&R executives.


C&R executives say that their reliance on revenue synergies has increased relative to cost synergies in their valuation of targets.


C&R executives point to integration/separation during a large complex deal as the phase with the greatest potential for challenges and risk.


C&R companies disclosed revenue synergy targets and plans to secure them. (Deals worth >$2 billion announced between 2018 and 2021)

When companies don’t announce revenue synergies it’s because they experience:


A lack of transparency in the target’s operations until deal close.


Poor visibility into data needed for accurate projection.


Fear of being devalued by market if targets are not achieved.

KPMG M & A Market Perspectives - Survey Analysis, June 2022

Dive into our thinking:

KPMG M & A Market Perspectives - Survey Analysis, June 2022

The revenue synergy imperative in CPG deals

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