AgTech Review Introduction
The Verdant team elected to modify this installment of our annual agtech M&A review. In addition to recapping the transactions that took place in 2021, we are also looking back on the last decade of deals that we have tracked to analyze the businesses behind the consolidation in the global agriculture technology sector, and the impact it is having on our industry.
2021 M&A Snapshot | 2022 Prediction
There were over 50 technology deals announced in 2021, excluding biotechnology and food tech, representing a 40% increase over 2020. More than 70% of transactions included a U.S. seller, followed by Europe at 18%. The major ag equipment players including Deere, CNH, AGCO, Kubota, and CLAAS were the busiest buyers in 2021, with involvement in at least 12 deals. Meanwhile, there was a noticeable absence from crop input buyers that have historically been aggressive acquirers in the crop technology segment.
A few deals caught our attention in 2021, not strictly because of valuation size, but because of the step-change outside of core business the transactions represent for several industry incumbents.
As mentioned above, ag equipment players demonstrated an innovative itch towards digital technology and autonomy, notably through CNH’s acquisition of Raven; Deere’s purchases of Bear Flag and Kreisel; Kubota’s announcement with AgJunction; and AGCO’s deals with Appareo and Headsight. The iron to software / sustainability strategy is significantly impacting the competitive landscape that these groups have traditionally dominated. Macro demands for sustainability, production efficiencies, and supply chain transparency are expected to continue fueling transactions of these types, both by OEMs and other agribusinesses.
Other noteworthy deals include Bushel’s purchases of FarmLogs and Grainbridge (the former joint venture between ADM and Cargill), as well as Valmont’s purchase of Prospera, which stemmed from Valmont and Prospera's longstanding partnership. Increasing volume of tech-to-tech deals was also visible in 2021. Groups like Pessl, Semios, Deveron, CropX, and Sentera expanded capabilities, talent, and commercial access inorganically; something we foresee occurring often in 2022.
Looking ahead, carbon remains a noteworthy topic for the coming year. Several transactions completed the last few years appear to include an element of data collection, verification, automation, and/or management related to carbon. Certain deals in 2021 directly followed this theme, namely Indigo’s purchase of Soil Metrics in October.
We are still bullish on a greater influence from private equity investors in agtech, either directly or in combination with existing tech players acquiring competitive or complementary businesses. The general outlook for consolidation in agtech is strong. Venture capital has continued to fuel both ideas and early-stage companies that plan to exit via M&A or public offering. Considering the volume of players in the industry and the relatively smaller set of interested buyers, we expect valuation pressure will continue in 2022 and beyond, exempting a few highly demanded verticals such as autonomy, AI, and sustainability, largely through the renewed use-cases of technology for carbon programs.
Looking back on the short history of agtech, we would not be surprised to see further commingling of specific verticals across the ag supply chain. Technology continues to bridge gaps and connect the sector, and M&A will be an important part in building a competitive industry with new and reformed stakeholder positions.
Reviewing Historic Tech M&A | What it Means Moving Forward
We hope that you will enjoy our included AgTech M&A Market Map showing active buyers and insights from the past decade. If we are missing relevant transactions, please let us know. Should you have questions or be interested in exploring opportunities together, the team at Verdant Partners remains eager to assist in the execution of your M&A strategy.
About Verdant Partners
Verdant Partners is wholly focused on food and agribusiness. We advise buyers and sellers through the business transactions that shape the competitive landscape of our industry. We have built a team of professionals with real world industry experience, having developed skills that extend beyond those of traditional M&A advisors. For this reason, we are recognized as the leading transaction advisory group for the global food and agribusiness industry.
Director, Verdant Partners