M&A in Agriculture: Is the Track Record Any Good?

The Varieties of Synergy - Capital Gains

The above is a well done article that is unspecific to agriculture, however, I think it’s relevant to tie to agriculture M&A. Often there is talk about about acquisitions in ag (will call myself out on this as a culprit), but the reality is that effective M&A is hard.

In ag, M&A often doesn’t have 1 + 1 equals 2 effect. And it definitely does not equal three. On average, it equals somewhere well under 2! This isn’t explicitly an agriculture problem— most M&A deals fail to create value (for customers and shareholders). Studies by McKinsey, Harvard, and KPMG have consistently illustrated that 70–90% of acquisitions underperform expectations, with only ~15% delivering excess returns above industry averages.

The reasons come back to things like challenges with integration, overestimation of synergy (and therefore overpaying), distraction, timing or even ego, with executives sometimes pursuing more for “size” and prestige than actual returns.

That last one is notable.

Consider AGCOs recent acquisition of Trimble.

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