Corporate strategy and governance model review for the largest agriculture and food production group in the Baltics
Client
Akola GroupThe background:
Akola Group is the largest agricultural and food holding company in the Baltic States that strongly focuses on exports. The company’s expansive portfolio encompasses diverse business lines from farming to trading to food production. Over the years, the group has achieved commendable growth through organic investments and strategic M&A.
In 2021, Akola Group acquired similar-sized Lithuanian agriculture and food holding company KGG and increased revenue by nearly 70%, leading to a turnover of almost EUR 2bn. The transaction substantially raised the company’s share of food manufacturing in the overall business structure and added new business lines. Following the initial integration of these business entities, the largest shareholders and management decided to revisit the group’s corporate strategy and governance approach to manage a much wider range and size of business units. And they approached us to help them achieve that.
Aim of the project:
Our project unfolded in two distinct phases, leading to the corporate strategy resulting from top-down and bottom-up efforts.
Achieving High-level Alignment. In the initial phase, we engaged the senior management and stakeholders of the holding company. We aimed to fully understand the individual business units’ financial and strategic performance. We assessed the equity value generation within each business unit and evaluated their returns on capital employed.
Aligning BU Strategies and Detailing Group Ambition. At the same time, we outlined potential strategic trajectories and governance frameworks for the holding company. We successfully lined up the perspectives regarding the roles assumed by each business unit within the overarching holding structure. Furthermore, a consensus was reached on the company’s most fitting governance framework and strategic vision.
During the second phase, we closely collaborated with the leaders of each business unit. Our main goal was to seamlessly harmonise the strategies of these business units with the outcomes of the first phase. We helped them develop a well-defined strategy to guide their endeavours over the upcoming 3-5 years. Throughout this process, we examined specific investments and plans put forth by the business units, challenging them to ensure rigour and viability. Simultaneously, we helped the holding company formulate a complete financial model for the next five years, capturing a holistic view of financial projections.
In parallel, we developed the chosen governance framework in detail. That culminated with the exhaustive proposal that detailed how management and governance should be structured at the holding company, laying the foundation for effective oversight and strategic execution.
Services provided:
- Articulating Akola Group’s ambition
- Defining roles and value creation objectives for each business unit
- Aligning directions for new investments
- Defining the role of the holding and governance structure of business units
- Estimating value creation targets on the group and business unit level
Project result:
The Board has approved the strategy and is currently implementing it.
The first greenfield investment projects and additional M&A deals were completed the following year.
