A long-running trend in corporate mergers that has worked miracles for the economy is at an inflection point, stirring debate over how to distinguish true synergy from mere diversification. This isn't just semantics. Realized synergies between two companies create big cost savings and enormous shareholder value. Diversification typically steers the other way. It broadens a company's realm and adds revenue--and overhead. Synergy is the first word out of the CEO's mouth when a deal is announced. But when you look back, the record often has not been very pretty.
The past decade was different, marked by mergers designed to focus companies...
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