Consolidation within agriculture is to continue - but ensuring acquisitions fit the core business and that funding methods are appropriate are both crucial, Dr Julian Voss from German group KTG Agrar told the Agrimoney Investment Forum.
KTG - which was founded 22 years ago, and now farms more than 46,000ha in Germany, Lithuania and Romania - is an integrated crop grower and consumer, producing grains, energy and food.
"We are one of the fastest growing agricultural concerns within Western Europe."
The group's output rose from €205m in 2013 to €378m last year.
It has grown by acquiring businesses, but Dr Voss said when he joined KTG in 2013 he realised all acquisitions were driven by passive identification.
"We took chances to acquire companies but there was no clear process."
Acquiring companies out of insolvency meant the business developed skills in managing and restructuring, but also "acquired some which don't fit into our core model".
Now KTG has a clear strategy for acquisitions, and actively identifies companies it would like to buy or partner with in a joint venture.
It is concentrating on Germany, a strategy which makes it less exposed to the world market.
Integration, up or down the value chain, was the main business trend, said Dr Voss. KTG had bought frozen food plants which allowed it to process its own crops and sell to supermarkets, lengthening its value chain.
But he said there were opportunities and threats with all acquisitions.
"No part of the value chain will be easily integrated," he warned.
Transaction preparation, closing and follow up will always need to be done with a focus on strategic planning and targeting.
Post-acquisition, achieving synergies is a long-term challenge, and "cannot be reached fully in the short- or medium-term".
The group was also undergoing a wider review, and is currently restructuring and refinancing. Dr Voss said while the business had a good equity story, how it had chosen to finance itself previously was "the wrong decision".
Specifically, the current bond finance, which requires a payment in June, does not work for an agricultural business, he said.
"It is the worst time of the year to pay - we have €67m in the fields, but not in cash."
By Emma Penny