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

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).

Citation

Grashuis, J. (2023), "Better performance after mergers and acquisitions? The case of US farmer cooperatives", Agricultural Finance Review, Vol. 83 No. 3, pp. 498-510. https://doi.org/10.1108/AFR-12-2022-0145