Turnaround of leading land-based fish farm 

Case Study: Restructure a leading Fish Farm, with an bolt-on acquisition

Aquaculture, specifically fish farming, has been recognized as a sustainable solution to meet the growing global demand for seafood. Among the various methods of aquaculture, Recirculating Aquaculture Systems (RAS) offer a technologically advanced and environmentally sustainable approach to fish farming.

RAS minimizes water usage and allows for precise control of environmental factors, making it suitable for producing high-value species. However, despite its potential, many RAS ventures struggle with profitability due to high operational costs, technological challenges, and market dynamics.

This case study examines the turnaround of a struggling RAS fish farming business through the strategic acquisition of its assets by a new company. The focus will be on the key challenges faced, strategies employed, and the outcomes of the turnaround process.

In 2023, a well-known RAS fish farming business in Europe producing salmon faced severe financial difficulties. Despite having state-of-the-art facilities and producing high-quality fish, the company struggled with a number of challenges.

• High Operational Costs: The energy-intensive nature of RAS, combined with inefficient processes, led to unsustainable operational costs.
• Technological Failures: Frequent system breakdowns and suboptimal water quality management resulted in lower fish yields and higher mortality rates.
• Market Competition: The company faced stiff competition from traditional aquaculture and imported fish, which were often cheaper.
• Debt Burden: The company had accumulated significant debt, making it difficult to invest in necessary upgrades or marketing initiatives.

In Q4 2023, the company was on the brink of bankruptcy, and the company distressed. Therefore, the main investor asked ValueDynamics to structure, lead and conduct the restructuring process.

Q1 2024, a consortium of investors with expertise in aquaculture and sustainable farming, acquired the assets of the old fish farming business. The acquisition was part of a strategic vision to turn around the business by leveraging the existing infrastructure while addressing its critical challenges.

The turnaround strategy was built on the following pillars:

• Operational Efficiency Improvement: Lean management techniques were introduced to streamline operations. This included better feed management to reduce waste and improve growth rates, and upgrading the water treatment system to enhance fish health and reduce mortality.

• Branding and Marketing: A rebranding effort highlighted the sustainability and quality of the farm’s products. The new brand, “PureWaters Aquaculture,” emphasized the eco-friendly practices and superior taste of its fish. Strategic partnerships with upscale retailers and restaurants were established to create a strong market presence.

• Financial Restructuring: The consortium negotiated with creditors to restructure the existing debt, providing the business with breathing room to focus on its turnaround efforts. This included extending payment terms and reducing interest rates.

• Cost Management: A rigorous cost management program was implemented, including renegotiating supplier contracts and reducing unnecessary overheads.

• Bolt-on acquisition: By acquiring another farming company, the farm could further secure their leading market position, while reducing the operational risks as well as their operational cost base.

Value Dynamics represented the main investor, and implemented a number of measures to bring this fish farming business back to profitability, and to sharpen their growth strategy going forward.

The turnaround of this aquaculture business serves as a compelling example of how strategic asset acquisition, coupled with operational excellence and market repositioning, can revive a struggling RAS fish farming business. The success of this case was not only in restoring profitability but also in building a sustainable, future-proof model for aquaculture.

This case study exemplifies our commitment to delivering tailored solutions that not only resolve immediate challenges but also lay the foundation for long-term growth and sustainability.