Managing and Evaluating Mergers & Acquisitions in Agribusiness: Insights from Market Expert CS Liew
We recently reached out to CS Liew, Managing Director of Singapore-based Pacific Agriscience, a veteran of the industry and member of the AgriBusiness Global Advisory Board, to get his perspective on a spate of mega mergers that happened five years ago and the effects on the current industry.
Liew, who has consulted on several mergers and acquisitions over the years, shares his insights on what makes a merger work and finally what to expect for the biological market. He also discusses the recent past and near future M&A activity. This is part one of a three part series. View part two of the series here.
ABG: What are the most important factors that make a company attractive to a potential acquirer (turnover/revenue, product portfolio, location, registrations, etc.)?
CSL: The most important factor is a track record in gaining consistent sales and profit growth with a portfolio of products with good margins. Ownership of product registrations and having semi-proprietary products and formulations are also key attractions to potential acquirers.
ABG: Are you concerned that too much of the market is concentrated into a few large companies? Is there enough competition?
CSL: Just below the handful of R&D majors are a dozen or so international players on top of tens of significant manufacturers of generics. The latter has gained good market share and profits over the recent years, which shows that there is enough competition out there. The fact that whenever patents of molecules expired, the majors or original manufacturers tended to source generic versions from China and India is clear testimony that there is room for all players in the market.
ABG: At the other end of the size spectrum, is the investment community doing enough to support the operations of start-up companies?
CSL: In the start-ups space, if there are good proprietary technologies and innovations, especially in the biopesticide and biostimulant sectors with double digit CAGR, there is very strong support from the investment community as well as from the majors seeking out such technologies to supplement their in-house R&D.
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