Enhancing Value in the Food Industry (FPSA)
•
0 likes•179 views
This document discusses strategies for enhancing company value through operational and transitional benefits. It provides an overview of tangible benefits such as stronger competitive positioning and easier access to capital. Additionally, it examines developing value-enhancing strategies by focusing on key value drivers. The document also includes a case study on the processed meat industry and discusses various strategic frameworks companies can use to analyze their competitive environment and identify opportunities.
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (12)
Similar to Enhancing Value in the Food Industry (FPSA)
Similar to Enhancing Value in the Food Industry (FPSA) (20)
Enhancing Value in the Food Industry (FPSA)
- 1. Enhancing Company Value Presentation to the Annual Conference of the Food Processing Suppliers Association Stuart M. Moss Managing Director IRVINE • SAN DIEGO • SALT LAKE CITY • TAMPA
- 2. 2 1. Introduction 2. Tangible Benefits of Enhancing Value 3. Developing Value-Enhancing Strategies Table of Contents
- 3. Introduction § Businesses $10 - $100 MM § Value-enhancing strategies § Business valuation § Acquisitions & divestitures (M&A) Focus § Food processors § Food machinery suppliers § Ingredient suppliers § ProcessExpo exhibitors Industry Involvement MISAMeat Industry Suppliers Alliance § Equipment suppliers § Ingredients suppliers § Consumables suppliers § Service suppliers Suppliers § Private business owners § Corporate executives § Division Management § Consultants Roles Insights
- 4. Enhancing Value -- Operational Benefits 1st -- Stronger Competitive Position • Industry continues to evolve • Customer changes • Competitor’s moves • Industry “winners” will: • Devote more resources to organic growth • Be more attractive to acquisition/alliance targets • Maintain an operational cushion to survive unexpected bumps 2nd -- Easier Access to Capital • Remains inexpensive • More accessible for stronger companies • To fund growth • To further improve competitive position • To manage bumps '11 '12 '13 '14 '15 '16 '17 '18 Meat Processing Equipment Revenue (Global) 42%
- 5. Enhancing Value -- Transitional Benefits Every private business owner will eventually exit their company • Hand over to Family • Sell to outsiders Objective of owners anticipating a family transition • Implement value-enhancing strategies • Establish the strongest possible competitive position Absentee Ownership Sale / Gift to Family Strongest Competitive Position The odds are against a successful family transition • 70% of family businesses do not survive the 2nd generation • 88% do not survive the 3rd generation
- 6. Enhancing Value -- Transitional Benefits (cont.) Various ways to transition businesses outside family Enhancing value enables owners to dictate terms • Whether objective is operational or transitional benefits • More control over where and when to transition Highest Business Valuation Different objective for current ownership • Implement value-enhancing strategies • Create the highest short-term business valuation Sale to Third Party MBO or ESOP Licensing or Strategic Partnership Restructuring / Bankruptcy
- 7. When to Enhance Value Be PreparedYour Timing vs. Market Timing
- 8. Low Customer & Vendor Concentration Consistent Financial Performance Competitive Differentiation Revenue & Growth > Industry Average Operational Efficiency Strong Financial Performance ProtectedIP No Legal or EnvironmentalIssues Experienced Management Team Solid Business Systems Value-Enhancing Strategies Strategies should focus on Value Drivers impacting a company’s ability to realize its Operational or Transitional benefits Operational Value-Drivers Structural Value-Drivers Robust Business Intelligence System
- 9. 9 1. Introduction 2. Tangible Benefits of Enhancing Value 3. Developing Value-Enhancing Strategies Table of Contents
- 10. Case Study: Processed Meat Industry Increasing Consumer Demand • Growing, aging population • Modest economic recovery • Increasing demand for: § Convenience foods § Ethnic foods CAGR Pressure on Food Processors • Food safety • Raw material prices • Price & delivery demands Consumption Growth 2013-18 (U.S.) 0% 5% 10% 15% 20% 25% '08 '09 '10 11 '12 '13 Gross Margin of Top 25 USA Meat Manufacturers Food Processor Imperatives • Create new value-added products • Address operating challenges: § Internal efficiency vs. co-packing flexibility § Retaining skilled workers
- 11. Case Study: Processed Meat Industry (cont.) Opportunity for Meat Industry Suppliers • Empathize with customers • Address unmet needs Changing Competitive Landscape • Current suppliers broadening offerings § R&D § Acquisition or Teaming • Threat of new processing equipment entrants § Meat segment growing 2x overall industry § Largest market is USA $Billions 18% Meat Industry Supplier Imperative • Develop value-enhancing strategies • Focus on key value drivers • Utilize most appropriate strategic frameworks
- 12. Strategic Frameworks Supplier Power: Low - Easy availability of raw materials - Fragmented raw material supplier base Competitive Intensity: Medium + Concentration of equipment suppliers + Significant investment in worldwide capabilities to improve technology & increase revenues + High exit barriers - Attractive industry growth - Strategic alliances exist New Entry Threat: Medium - High capital requirement - Established relationships with Large & Mid-Sized processors + Possible expansion from other food equipment segments Buyer Power: Medium -Far more buyers than equipment suppliers +Large buyers = 30-50% of lines +Competitive & customer pressures raise buyers’ equipment requirements Threat of Substitutes: Low - Manual processes less viable - Cheap knock-offs not acceptable to processors + Used equipment available Industry Attractiveness framework for equipment manufacturers currently outside processed meat industry
- 13. Bowl Chopper Mixer / Blender Macerator Injectors Emulsifier Tenderizer Grinder Massager Dicer Filler Grinder (In-Line) Linker Inspection Clipper Former/Depositor Smokehouse/Cooker Co-Extrusion Slicing Checkweigher Conveyors De-nesters Packaging Competitor A Competitor B Competitor C Competitor D Competitor E Competitor F Competitor G Competitor H Strategic Frameworks (cont.) Mapping framework for describing how broadly existing suppliers compete (scope of supply, food segments, geographies)
- 14. Purchase Criteria Priorities Customer Segment A Relative Ranking 1st Machine uptime Comparable 2nd First pass quality Better 3rd Machine throughput Worse 44h Life cycle cost Better 5th Ease of operation Comparable 6th Field service support Worse Differentiation framework comparing how well relevant suppliers meet the key purchase criteria within various customer segments Strategic Frameworks (cont.)
- 15. Competitive Advantage Competitive Advantage framework to determine what internal processes, IP, or capabilities can create and sustain key differentiators Strategic Frameworks (cont.)
- 16. Wrap Up Consider Variety of Strategic Frameworks Prepare to Take Advantage of Opportunities Enhancing Value Creates Tangible Benefits “Control your own destiny, or someone else will.” Jack Welch Stuart M. Moss smoss@keystone-cap.com Office: 949-486-8515 Mobile: 714-412-0880