What drives post-acquisition farm growth? Empirical evidence from Ukraine

This study contributes to the limited body of research on mergers and acquisitions in primary agriculture by examining how large corporate agroholdings achieve profitable post-acquisition growth for the farms they acquire. Using System GMM estimation, we analyse farm-level data from 648 farms acquired by agroholdings in Ukraine between 2005 and 2016. Our findings show that agroholdings facilitate post-acquisition growth and performance improvements by employing several integration strategies. Specifically, they leverage horizontally integrated structures to: (i) consolidate land resources of acquired farms to achieve scale economies; (ii) reallocate farm resources toward more profitable production lines; and (iii) intensify production on acquired farms. These results support established firm growth theories, namely, the independence of firm growth rates from firm size (Gibrat's law) and the existence of Penrosean limits to growth.