Case Study: Commercial Due Diligence, Agrichemicals
Our client needed to decide whether or not to proceed with an investment into a fast-growing Chinese agrochemicals company.
Case Study: Commercial Due Diligence, Agrichemicals
Our client needed to decide whether or not to proceed with an investment into a fast-growing Chinese agrochemicals company.
Situation
- US-based private equity investor evaluating an investment in a Chinese agrochemicals company (the ‘Target’)
- Target seeking funds to launch new crop protection product lines
Approach
Stenvall Skoeld’s approach focused on assessing key factors including:
- Industry and market segment attractiveness
- Suitability of the Target’s strategy
- Achievability of the Target’s financial forecast
Our research and analysis include
- Review of public and subscription-based research and industry publications
- In-depth management interviews and manufacturing site visits
- Interviews along the Target’s value chain
- Interviews and discussions with industry experts
- Analysis of government and industry statistics
- Analysis of financial and commercial information from the Target
Result
- Industry analysis showed strong growth ahead but changing competitive landscape favoring larger and more advanced competitors.
- Target had overestimated growth and margin potential of new product lines.
- Due diligence gave strong indication that Target would not come close to achieving its strategic and financial goals.
- Discrepancies between Target’s claims and Stenvall Skoeld’s interview findings raised doubts about management integrity.
- Client decided not to invest but to pursue more attractive opportunities in the sector.
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