The pace of mergers and acquisitions underway in agriculture can seem dizzying. He’s simply seen these periods of consolidation in business over the past 25 years.
Yet for economists such as Michael Boland of the University of Minnesota, it’s just another day at the office. Farm operators have left the industry at a faster rate than the wholesalers, retailers and manufacturers that serve them.
“But the question to ask is whether the same discoveries, products and benefits for the farmer could arise from licensing agreements between these companies, rather than through consolidation? “Consolidation has been taking place for many decades across all segments, from crop inputs to grain merchandising to food processing,” says Dean Cavey, managing partner at Champaign, Ill.-based business brokerage and consulting firm Verdant Partners.
M&A is not the only way to collaborate on technologies.” As producers push forward into the headwinds of low commodity prices, they must also decide whether the latest leg of consolidation merits pushback against the vendors whose products they rely on—or acceptance of inevitable market ebbs and flows in agriculture. “Many of the transactions that have taken place during this time have involved privately held, family businesses owners who are looking to monetize their lifetime of investment in building their business.
Driving deals of all sizes are powerful forces — global vehicle production growth, auto technology shifts, automakers’ platform globalization, and supplier profitability — that show no signs of abating.
In part, strong M&A activity reflects an underappreciated fact: Automotive supply is a growth industry.
Lately, the combination of rising demand and falling fuel costs has lifted profits.
Globalization continues to foster deal making among suppliers positioning themselves to serve automakers that are consolidating their nameplates into a smaller number of flexible global platforms.
These platforms require suppliers with worldwide capabilities, leaving regional suppliers vulnerable and spurring consolidation.
Over the past 15 years, Europe’s full-service airlines have flown through turbulent skies as they generally failed to adapt to an increasingly price-competitive short-haul market.
Because of this, we are often times able to perceive some of the changes that are taking place before others, which gives us and our members the ability to react faster to them, therefore staying relevant in a growing and evolving industry.”“In the 48 months that are coming, we will see a huge influx of available capital in the industry.
We will see a change in structure, scale, type of offering, and penetration our industry can make on a global basis.”Think about it, if there are 2 or 3 consolidators looking at the same time, this drives the small or independent operator’s value significantly.