What is the difference between operating synergies and financial synergies?

Operating synergies improve the operations of the business — cost savings and revenue gains that raise EBITDA/operating cash flow. Financial synergies improve the financial profile without changing operations: lower combined cost of capital (greater scale/diversification, higher debt capacity), tax benefits (using the target's NOLs, step-up amortization - which only arises in a taxable asset purchase or a 338(h)(10)/336(e) election, not a plain stock deal - and interest-tax shields), more efficient internal capital allocation, and reduced cash flow volatility. Strategics emphasize operating synergies; financial synergies are real but often smaller and more deal-specific.