“Some suitable areas are agricultural resales, the agricultural equipment sector, agtech…”
Vinicius Oliveira is a partner at Redirection International, a company specialized in mergers and acquisitions and business management projects.
Oliveira has a degree in economics from the Federal University of Paraná, and a postgraduate degree in finance from the University of Liverpool.
AgriBrasilis – Should there be more mergers and acquisitions (M&A) of biological products companies in the near future?
Vinicius Oliveira – Yes, a market with growth potential such as biological products tends to attract the interest of both investment funds and strategic companies in the sector.
Many innovations in procedures, new strains, among other examples, should still happen in this market. This will generate opportunities for acquisitions and investments.
AgriBrasilis – How did the conflict between Russia and Ukraine change this scenario?
Vinicius Oliveira – Brazil is a large importer of fertilizers. Much of the inputs for fertilizers come from this conflict-ridden region, damaging supply and increasing prices for farmers.
Bioinputs can be seen as an option to replace current products, and could reduce the impact of war and Brazil’s need for imports.
Currently, biological products are complementary products to traditional chemicals, but they should gain more and more space.
AgriBrasilis – What other areas of agriculture are ripe for M&A?
Vinicius Oliveira – Some suitable areas are agricultural resales, the agricultural equipment sector, agtechs – software and/or technology companies focused on the agricultural market, the precision agriculture segment, etc.
AgriBrasilis – Lavoro has carried out 25 acquisition operations since 2017. What other companies are carrying out similar moves?
Vinicius Oliveira – In the resale segment, I can list Agrogalaxy, Nutrien and Alvorada, for example.
“It is a differentiator to be well positioned in a market or niche where few competitors are also present”
AgriBrasilis – What makes a company the target of an M&A process?
Vinicius Oliveira – Firstly, it is of great help to be in a heated market and targeted for M&A, as is the case with agribusiness.
The company must offer quality products and services, which differentiate it in the market. It is a differentiator to be well positioned in a market or niche where few competitors are also present. Furthermore, it is important to have a differentiated technology that other players are interested in acquiring.
AgriBrasilis – What are the risks of unsuccessful M&A operations?
Vinicius Oliveira – Some examples of risks in operations are:
- Poorly planned integration: lack of an effective integration plan can lead to cultural conflicts, operational problems and loss of key talents.
- Inadequate valuation: If the valuation of the target company is not accurate, the acquiring company may end up paying more than the company’s true value.
- Insufficient or excessive financing: failure to obtain adequate financing can create financial problems, while excessive debt can overwhelm the purchasing company.
- Cultural challenges: cultural differences between the organizations involved can generate internal conflicts, demotivate the team, and reduce productivity.
- Loss of customers and employees: uncertainty during the M&A process can lead to the loss of customers and employees, affecting the company’s stability and performance.
- Legal and regulatory issues: failure to comply with applicable regulations and laws can result in legal penalties and reputational damage.
AgriBrasilis – Is the time for M&A transactions in agriculture now? Why?
Vinicius Oliveira – The time for M&A in agriculture is right now and also in the future.
Agribusiness represents approximately 25% of Brazilian GDP and is the engine of our economy. Naturally, it attracts investment and innovation.
Brazil led agricultural productivity in the world:
With the continuous increase in population, the increasing importance of environmental issues, and the growing need for food production, the country has full capacity to continue leading this movement.