Technical due diligence of target seed company for acquisition by agrochemical major.Title Description
A leading Indian agrochemical company was looking at strategic investment in seed business. Sathguru reviewed competitiveness of the target by evaluating its current product portfolio and scientifically assessing its research programs and ascertaining strength of its breeding material, human and infrastructure capabilities. Sathguru also helped the client ascertain enterprise value for the target.Challenge/Problem statement/Situation analysis
Our client, a leader in agrochemicals, wanted to acquire a seed business and consolidate its leadership position in agri inputs sector. Seed sector is inherently a long gestation business that requires significant time and resources for developing germplasm and products. At this juncture, there was also a spurt in corporate investments in seed sector and leading agrochemical companies were looking at consolidating their presence in providing comprehensive services to farmers. The client chose strategic investment route and sought technical assistance from Sathguru in conducting a detailed scientific due diligence of the target and to ascertain price band for acquisition.Scope
The scope of Sathguru’s engagement included:
- Scientific review and evaluation of target’s product portfolio, research programs and germplasm pool for market relevance, competitiveness and readiness for future.
- Assess human resource and infrastructure capabilities and benchmark with completion to assess their potential to develop and launch new products.
- Ascertain price band for target acquisition
Sathguru’s approach was to assess the techno-commercial capabilities of the target and strategic fit of its product portfolio to that of client’s existing business.
To achieve this, Sathguru:1. Interacted with the target company’s management and lead R&D personnel to understand their vision and growth plans for the organization from research and market perspective. 2. Conducted detailed scientific review to:
- Identify key crops/ market segments that would have synergy with clients existing business
- Evaluate intellectual property, human resources and infrastructure bandwidth to ascertain strength of its current research programs
- Assess competitiveness and market relevance of current products, products in pipeline and traits under research
- Assess target company’s linkages with technology and germplasm providers to ascertain its readiness and capabilities in technology access and co-development
- Crop and segment wise product portfolio for their past performance and market presence
- Target company’s competitiveness with respect to market players, industry trends and range & strength of product pipeline
- Sathguru recommended that target would be a good strategic fit with client’s existing business based on critical analysis of target from techno-commercial perspective. Sathguru also based this recommendation on the post-acquisition synergies emerging from access to strong brand presence and distribution network of the client.
- Sathguru provided a price band for the potential acquisition based not only on commercial aspects, but also value of IP and research pipeline.
Sathguru’s assessment helped the client in making an informed bid for proposed target company acquisition.