Better performance after mergers and acquisitions? The case of US farmer cooperatives

Jasper Grashuis

Agricultural Finance Review, 2023, vol. 83, issue 3, 498-510

Abstract: Purpose - This study analyzes the long-term effect of merger and acquisition (M&A) activity on the profitability, efficiency and liquidity of the largest 500 farmer cooperatives in the United States. Design/methodology/approach - Secondary data from the U.S. Department of Agriculture are complemented with primary data collected from print media publications about M&A activity by US farmer cooperatives. The analysis is based on group comparisons of means and distributions to study the effect of M&A activity on financial performance. Findings - Farmer cooperatives with M&A activity generally have lower profitability, efficiency and liquidity than farmer cooperatives without M&A activity, both at the time of the merger or acquisition as well as afterward. Marketing cooperatives in particular perform worse following M&As. Also, the post-merger performance of farmer cooperatives with M&A activity is not affected by the profitability, efficiency or liquidity of the target. Originality/value - Research on the post-merger performance of farmer cooperatives is both scarce and dated. This study analyzes the effect of M&A activity for a relatively large sample and a relatively long time period (2005–2020).

Keywords: Mergers and acquisitions; Agricultural cooperative (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-12-2022-0145

DOI: 10.1108/AFR-12-2022-0145

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