Synergy is defined as the:

A) Positive incremental net gain associated with the combination of two firms.
B) Entering into a new industry in search of profitable opportunities.
C) Economies of scale that relate to the average cost of goods produced.
D) Process of removing existing managers after a successful takeover.
E) Benefit of the lockup agreement.

Synergy

The increased effectiveness that results when two or more entities work together compared to working separately.

Lockup Agreement

The part of the underwriting contract that specifies how long insiders must wait after an IPO before they can sell stock.

Economies of Scale

Cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.