Estimates put the world’s population in 2050 somewhere between 9 and 9.7 billion people, straining the earth’s resources to an ever approaching breaking point. This will increase the importance of all of those businesses that harvest, mine, process, distribute and sell these raw materials and goods, and the demand for these concerns will rise accordingly. As a veteran UK business transfer agent, Turner Butler has a well earned reputation for helping agriculture, food, materials and related businesses prepare their operations for sale and for matching them with able buyers with the means, knowledge and drive to continue where the current owners (the sellers) leave off.
Here are the few businesses we have recently sold in Agriculture, Food and Materials Sector:
- Fowey Sea Farms – Cornish mussel farm
- Westney International – International agricultural / industrial equipment distributor
- Wood's Fish (Chester) Ltd. – Fresh fish & frozen food wholesaler
- T & S Thomas Family Butchers – Prestigious family butcher shop
- Firth Fencing - Established industrial/commercial fencing contractor
There are few industries as fundamental to our existence as agriculture and other downstream food related trades, such as food processing, distribution, and even retail food shops (referred to as “agri-food” herein). Consequently, they are subject to the influences of (and themselves influence) a wide range of factors, including the forces of nature, regional and global environmental conditions, local and geo-political agendas, sociological practices, economic prosperity or deprivation, the progress of technology and, of course, cultural and individual preferences.
With 35 years of experience selling businesses in the UK, a great deal of which have been agri-food businesses, Turner Butler is closely familiar with the aforementioned influencing variables and is adept at advising such businesses throughout the business transfer cycle. Following are a few of the things you, as an owner-seller, can expect and actions you can take to prepare for and streamline the sale. Moreover, as custodians of the UK’s largest database of vetted buyers, we can safely say that buyers are looking for these same features and will often pay a premium for companies that have addressed them prior to putting their businesses on the market.
Readying your agri-food business for sale
Becoming more environmentally and socially conscious
We, the human beings who populate planet earth, have all become more aware of the increasing necessity to live in harmony with our surroundings, natural or societal. Indeed, environmentally and socially friendly corporate practices are sweeping across all markets, and it is no surprise that agri-food industries top the list. As existing or potential owners of such businesses, becoming “greener” has become a strategic imperative. Here are a few business initiatives to consider when preparing your business for transfer:
- Organic Certification – In 2017 only 2.9% of UK farmland was organic, despite tremendous growth in consumer demand and substantially higher margins on organic products. Businesses all through the supply chain should consider making adjustments to capitalize on this movement.
- Integrated Systems – Increase crop / production yields and profitability by integrating systems to maximize synergies and lessen environmental impact.
- Green Packaging – Consumers and businesses alike are demanding sustainability. With packaging being the only advertisement seen by 100% of your consumers it makes sense to do what it takes to add an earth-friendly seal to your packaging.
- Waste Reduction – It is estimated that reducing waste by 25% in the food processing industry alone could feed over 870 million people. Donating unsold crops and food items or selling surplus to environmental initiatives (e.g. bio-fuel) are just a couple waste reduction measures you could take.
Improving your operations
More “conventional” and “non-conventional” changes that you can make include:
- Diversification - Buyers are always looking to diversify their risk. Seek to increase crop and product variety by adding complimentary product lines or moving up or down the value chain.
- Value-Add Processes – Vertically integrate your processes, e.g. if you are an agriculturalist, consider adding drying, cooling and packaging to your suite of processes.
- Technology Innovation – The options for technological improvement are endless across all levels of the agri-food industry, from agribots and drones to integrated ordering systems for shops and distributors. Find which ones make sense for you and the continued success of your business under new proprietors.
Know what you want to do and what impacts valuation
While Turner Butler offers free valuations to our clients, it is helpful that you understand what some of the key factors are that impact valuations:
- Yields (plant / acre…)
- Investments, especially in technology
- Asset condition
- Many more…
Of course, your “exit strategy”, i.e. your plans after the sale, dictate the deal structure, which directly impacts valuation and who your potential buyers may be. We will aid you in considering the best alternative for you, for example:
- Selling the land, keep the business.
- Keep the business local by finding a strategic buyer intent on staying in the area.
- Make a “clean break” by selling to a financial buyer with all the necessary resources who is looking to enter the agri-food industry.
These variables are truly, just the tip of the iceberg, and underscore the need to engage a reputable business broker, such as Turner Butler, with the experience to help you enter and successfully close the sale of your agri-food business.