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Home >> Why Scalar >> Case Studies >> Commercial Due Diligence helps US-based Agrochemicals supplier and investor make wise Investment Decision

Commercial Due Diligence helps US-based Agrochemicals supplier and investor make wise Investment Decision

 

Scalar Market Research specializes in high-end market research and aims to offer real-time data and consulting services to clients across the globe. The following case study comprehends how we work with our client and help them take major investment decisions.

The Client Challenge

Our Client, one of the world’s leading agrochemical suppliers, provides tonnes of pesticides, herbicides and insecticides per year to large industrial customers. Client was looking forward to investing in the Brazilian market. On studying the market players, Client came across another agrochemical company (Target) which was seeking funds to launch their new crop seeds production lines. However, before entering the agreement, our client wanted to conduct a Due Diligence and ensure the deal’s worthiness. Due Diligence is a type of investigation meant to understand the risks or returns involved in a potential deal. The client wanted assistance from Scalar Market Research on the following aspects:

  • To provide a detail industry and market assessment of the target country (Latin America).
  • To provide insights on the business strategy and financial goals of the target company
  • To help the client make investment decision

Approach

Our team started by collecting public reviews and subscription-based research and industry publications of the target company. Data was collected by interviewing the distributors, and research and development (R&D) partners of the target company. In addition, management interviews and visits to the manufacturing sites helped gather more inputs. Compilation of the information gathered from these sources assisted us in providing details on industry and market assessment. It also gave us insights on the target company’s business strategy and financial goals. Also, our team took efforts in analyzing government and industry statistics by interviewing with the industry experts.

Results

Based on the findings by our team, the client decided not to invest in the Brazilian Agrochemical Company. There were several discrepancies found between target company’s claims and the actual findings after interviewing and discussing with the concerned people. The target company had overestimated the growth and margin potential of the new crop seeds production lines. Due Diligence indicated that even after our client’s investment, the target company will not be able to achieve its financial goals. Industry analysis showed strong growth ahead despite changes in competitive landscape, favoring larger and more advanced competitors. Hence, the client decided to avoid the agreement and pursue more attractive opportunities in the sector.

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