Time‐to‐completion for mergers and acquisitions in the food and agribusiness industry

• Published in: Agribusiness (New York, N.Y.) N.Y.), 2022-07, Vol.38 (3), p.579-607
• Main Authors: Adelaja, Adesoji O., Mukhopadhyay, Ramyani
• Format: Article
• Language: English
• Subjects: acquirer; Acquisitions & mergers; Agribusiness; financing; Food; Food industry; mergers and acquisitions; negotiation; regulatory approval; target; time‐to‐completion; transaction advisers
• ISSN: 0742-4477; 1520-6297
• DOI: 10.1002/agr.21734

Longer time‐to‐completion (TTC) increases transaction costs, delays deal benefits, and reduces the probability of meeting transaction objectives in mergers and acquisitions (M&A) transactions. This paper conceptualizes the determinants of TTC and estimates their effects in the food and agribusiness industry (FABI) due to the critical importance of TTC to M&A success and the dearth of existing studies on the industry. We confirm that longer TTC increases the likelihood of deal failure. We also find the following: company‐specific factors such as acquirer solvency and leverage reduce TTC; deal complexity factors such as deals involving payment in cash or hard currency conclude faster; deals involving both acquirers and targets from the same country or industry take longer; using legal or financial advisers lengthens TTC; limited transparency or greater risk involved in a deal do not delay financing; deals consumed during a recession take longer; deal size and acquirer history of repeated M&A activities neither accelerate nor delay TTC. Considering the limited existing information on the contributions of various factors to timely deal completion or delays in FABI, our findings are useful in predicting M&A deal duration, costs, and potential for success. [EconLit Citations: G24, G34, L22, L66].