Inter-temporal Scope and the Synergy Life Cycle

Xia, Fan; Walker, Gordon

doi:10.2139/ssrn.5403776

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Inter-temporal Scope and the Synergy Life Cycle

SMU Cox School of Business Research Paper No. 25-20

39 Pages Posted: 25 Aug 2025

See all articles by Fan Xia

Fan Xia

Southern Methodist University (SMU) - Strategy & Entrepreneurship Department

Gordon Walker

Southern Methodist University (SMU) - Strategy & Entrepreneurship Department

Date Written: August 24, 2025

Abstract

We investigate intertemporal scope in acquisitions. The intertemporal scope entails the redeployment of a capability that has been used up and then reactivated. The capability we examine is a commercial bank's ability to restructure troubled debt. We study the capability's redeployment when "capable" acquirers buy target banks with a high percentage of bad loans. We argue that smaller banks are more able to redeploy the capability because their smaller size facilitates retrieving the knowledge underlying it. Also, a capable acquirer's improvement in the target's debt should follow a synergy life cycle as the target's bad loans are restructured. Using a triple-differences (DDD) methodology, we find support for our hypotheses and discuss their relevance to research on intertemporal scope and the synergy life cycle.

Suggested Citation: Suggested Citation

Xia, Fan and Walker, Gordon, Inter-temporal Scope and the Synergy Life Cycle (August 24, 2025). SMU Cox School of Business Research Paper No. 25-20, Available at SSRN: https://ssrn.com/abstract=5403776 or http://dx.doi.org/10.2139/ssrn.5403776