Market and competitor insights / acquisition support - consumer products

Leading commodity ingredients company seeking to expand into speciality ingredients

• In which speciality food ingredients segment(s) should we seek to establish a position, on account of both attractiveness and fit with our current business?

• Which is our preferred acquisition candidate, and what is its value to us?

• IAMCO worked with client management to understand existing capabilities, and develop criteria that speciality ingredients segments and acquisition candidates must fulfil. We then gathered information on the speciality ingredients market and competitors, interviewed existing players and analysed market data to evaluate market attractiveness. We conducted in-depth customer interviews to understand their requirements and assessment of speciality ingredients suppliers. Using this information, we identified and evaluated potential acquisition candidates in attractive segments. We then supported our client on due diligence.

• Both customers and management would be uncomfortable with expansion outside our client’s core application. Customers required expertise in individual ingredients, coupled with applications know-how, rather than a broad ‘one-stop shop’ approach.

• Our client should therefore expand into speciality ingredients segments that feed its existing application. It should acquire a business with both scale and expertise in the ingredient(s), and the commercial capabilities required to be successful in speciality ingredients.

• There were a small number of attractive segments of a substantial size, with a positive outlook for growth underpinned by consumer trends and customer demand for value-added solutions

• Efforts should be made to acquire one recommended candidate that met the criteria.

• Fortuitously, it was announced that this candidate was to be auctioned, but our client could not identify sufficient synergies to justify the multiple eventually paid by a private equity firm.

• Our client’s foothold in speciality ingredients should therefore be strengthened through organic means and bolt-on acquisitions, with the possibility of a major acquisition at a later date.