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.
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.
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.
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).
