International Journal of

Business & Management Studies

ISSN 2694-1430 (Print), ISSN 2694-1449 (Online)
The impact of M&A experience on performance: An empirical analysis of the Brazilian case



This study intends to assess whether companies that experience M&A performed superiorly to those firms that did not in the same period in a emerging market. In addition, it aims to verify if the constant use of M&A is correlated with the improvement of a company’s financial performance, or if at some point the excessive use of M&A could harm the firm’s performance. The study analyzes M&A transactions in Brazil that took place from 1995 to 2014. In order to avoid selection bias, propensity score matching (PSM) is applied to compare the financial performance of companies that did M&A with those that did not carry out any M&A. The U-inverted relationship between performance and M&A experience was evaluated using linear regression model with a quadratic experience term. The results suggest a possible disadvantage in adopting M&A as a performance improvement tool, what may come from strategic decision-making problems within the company itself or from agency conflicts. In addition, an inverted U-shape relation was found between the performance and the number of M&A transactions accumulated in the last three years and five years, what corroborates the theory that M&A can improve financial performance at first, but the more transactions a company does, the less the ability to manage the results obtained from them.