Seek Advice When Facing a Fork in the Road

Guest commentary by John Crabtree, AgriCapital Corp.

All agricultural businesses will periodically face forks in the road whereupon decisions, both strategic and financial, must be made concerning the future of the business. The causes are numerous and include an older generation of management/ownership planning for succession, new partners and/or managers entering the business, younger family members not wanting to exit the business, presentation to the ownership of a significant opportunity for the business, and/or a long-term downturn impacting the business negatively and challenging the balance sheet.

Many owners ask, “Why can’t we just figure this out for ourselves?” And, “Why do we need to have outsiders involved in our business?”

In today’s world, all agribusiness is global. This is true whether or not your business is global, so you need the assistance of an investment bank that is also global and has that perspective. When picking someone to help you deal with the current fork in the road, it is important to look for long experience in areas of technology, inputs, production, processing, distribution and retail in numerous agribusiness sectors, not just manufacturing. It is imperative that your advisors understand the potential impact of new and developing technologies on your business. A good example is how the new technologies in seed, traits and herbicides introduced in the 1990s had a dramatic negative impact on the need for row-crop cultivators, although a few are still manufactured for organic, vegetable and other farming. Other technology developments and practices that have impacted our businesses have included strip and vertical tillage, precision and variable-rate planting and herbicide application, coordinated precision equipment operation, lean manufacturing, and data mining and application/development, to name a few. And now we are hearing about autonomous tractors and potential applications for drones.

During the past 33 years, AgriCapital has been involved exclusively as an investment banker to agribusiness. It has been hired by 450 agribusiness clients to carry out over 550 assignments, half of which were in the merger-and-acquisition area and half in either financing or financial or strategic consulting. It is based in New York with clients around the globe. It has more than 20 consultants on its advisory board with expertise across the industry. You may be aware of many of its clients (many from this Association) through announcements made by the clients themselves. Numerous other projects are likely unknown to you, because no public disclosures were ever made. At AgriCapital, confidentiality is something we understand.

When you face your next fork in the road, select an investment banker to assist you in making the best decisions. It is important that you choose one who is involved in and understands the agribusiness world, has a global perspective, has the appropriate resources (e.g., database, networks), and is well-known in the agribusiness industry. Most important in your selection is to choose an investment banker who you trust to look after your best interests.

AgriCapital has been an Association member since 2004.

Contact Crabtree at (803) 431-7881 or crabtree@agricapital.com.