So How Much Do You Think Your Seed Company Is Worth?
Have you ever thought of selling your company, or might you be part of a merger? One consideration that comes into play is your data, and its mismanagement, or relative inaccessibility, could actually devalue your company. There are many aspects that go into the valuation of a company, some of which include future prospects of the business, the risks of the business and the cost of capital. But for any seed company, it’s the germplasm that’s worth the most. What’s the potential of that genetic material? Is it $5 million? $10 million? Maybe $1 billion?
If a potential buyer asks the value of your germplasm, are you prepared to give a response, and do you have the data to back it up? Any experienced breeder can look at the data and get a sense of how the program has been managed.
As an example, a potential buyer asks to see the data associated with the Top 10 lines. The breeder with Company A has to sort through piles of Excel sheets and then transfer the data to another sheet so it’s all in one place. The breeder with Company B hits a few keystrokes and automatically pulls up the Top 10 lines and all associated data. Now if you’re the buyer, which breeding program do you want to inherit? It’s a “Trust me, it’s all there” situation versus being able to say “Here it all is. Do you need anything else?”
If the data isn’t very useable, it’s going to cost the buyer. For instance, we met a cucumber breeder in the U.S. who had just started with a company. When he arrived, he found all the data in old binders and cryptic sheets — not even in Excel! The data was not in a form that allowed him to use it. This was just this year, not back in the 1970s. The information there might be valuable, but it’s hard to decipher and use.
As a breeder, you should be able to easily pull requested data (all parents or all populations) and show it to a potential buyer. You might also have to prove there is no patent infringement. The best way to prove this is to have a highly relational database where nomenclature is standardized and one can search by variety name or number and everything associated is called up. As a new owner, if this step is ignored, the penalties could end up costing you more than what you paid for the company — not a comforting thought.
If you have a strong, well-organized database, this increases the value of your germplasm and genetic material. When you consider all this, the cost of plant breeding software is minimal; it has the potential to pay back 10:1 or maybe even 100:1. Properly managing your data in a highly relational database has a compounding effect over time.
If you have good material and you have the data to back it up, companies will line up to buy it.
(First published on SeedWorld.com, January 2018)
Find out more at: agronomix.com
Dr Dieter Mulitze is Founder and CEO of Agronomix Software Inc. – developers of leading plant breeding software for breeders and variety testers.
