Most of the MSFs had experienced liquidity stress that is typically associated with trying
to repay debt in the early years after land purchase, and felt that the sugarcane supply
agreements constrain enterprise diversification. Between 60% and 100% of the MSFs in
five of the seven home delivery mill areas were not satisfied with the mentorship
provided by the sugar millers. Over 54% of respondents were clearly informed about the
structure of the graduated loan repayments, and received their loan statements on time.
Over 90% of the MSFs would like a co-ordinator to monitor/advize on how to improve
their financial performance, and felt that an independent valuer should value the farms
that will be sold. The MSFs who opted to first rent farmland wanted to increase their
equity before buying; perceive that annual returns are low relative to farmland value; are
younger; have less farming experience; and have more formal education.
These results suggest that liquidity management skills will be critical if new MSFs, or the
beneficiaries of other GMLSs, are to successfully access land when they are highly
leveraged. The high rate of preference for first renting farmland implies that the MSFs
seem to still experience cash flow stress despite having graduated repayments. Options
to improve client liquidity in this or other GMLSs include requiring larger equity down
payments, choosing buyers with substantive off-farm income, making reasonable
drawings levels, and renting before buying (particularly for younger, less liquid growers
with less farming experience). Further research is needed to establish whether the
millers can afford to change the terms of the 20-year sugarcane supply agreements.
Industry players could leverage international donor funding for empowerment projects to
improve the quality of mentorship programmes. Ithala Bank can improve client service
by more clearly communicating the structure of the graduated repayments, sending loan
statements on time, and helping clients to interpret loan statements. There is also a new
commercial opportunity to act as a co-ordinator to monitor/improve the MSFs’ financial
performance. Using an independent farm valuer would avoid perceptions of bias in the
valuations of farms offered for sale in such schemes.
Valuation of Target Firms Acquired In The Food Sector During The 1996-
2001 Wave
Francis Declerck
The question posed in this paper is to update knowledge about food corporation’ value
during those last years, particularly the during the last wave of mergers & acquisitions
(M&A) from 1996 to 2001.
The paper studies valuation ratios of food companies that were part of M&A involving at
least one French company during the 1996 - 2001 period. Data about corporate
valuation are available for 100 transactions. Valuation is studied as a multiple of total