Is there really synergy creation after M&A? Evidence from Brazil under the life cycle approach

Abstract Theoretical models predict that M&A results in synergy creation, and the empirical literature suggests that mature firms are consistently less risky and then more likely to succeed on such activities. We then investigate the life cycle stage’s role in the synergy creation after a Merger and Acquisition (M&A) activity in the Brazilian capital market. We use data from non-financial firms listed at the Brazilian capital market between 2010 and 2017. Data on M&A negotiations were extracted from the ANBIMA’s database, while financial accounting information was collected on the Comdinheiro® database. Using the Propensity Score Matching to develop a control group, we estimate a linear regression model to capture the diff-indiff effects on synergy creation for each stage, but focusing on mature firms, after the M&A activity. After several robustness checks, we firstly document a decrease on average in performance measures after the M&A. Moreover, we found no statistical differences for maturity neither for other stages. These results give rise to questions about the proper conditions for the bidder before engaging in such a firm reorganization and claims for future research on synergy creation and motives for M&As.