RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:FutureCiao wrote: To put a bias towards your narrative about how to value a business that depends on 3 year distribution agreements you wanted to have that as an input for uncertainty in the valuation. Given the strong relationship between the 2 companies, and the enthusiasm they have towards distributing more products as Gilles articulated in the SCD interview that fear is unfounded. As a backup, Gilles mentioned that there are other key players in the distribution business. Lastly J&J is Symrise's largest customer so there is no real incentive to sever their ties with either Ceapro or J&J, but rather the opposite as shown with the min. annual volumes.
If it's such a strong and certain relationship why only three years? Only 2 now. That's very short. Distribution deals are often much, much longer. Who wants to risk losing the relationship and wants the potential out in two years? Why?
It's always a strong relationship until it is not. What if another company offers a better deal for future CZO products and Symrise feels jilted?
If it was CZO that had the direct distribution relationship with J&J the risk of Symrise finding an alternative suppier would be zero. Now that CZO has built a $20 million business the incentive to try and copy the product has also increased. IP thiefs in China, etc., also have increased incentive. The more it grows the greater the risk. Some shareholders even want CZO to tell the world everything they know about avenanthramide as product and promote it to attract attention. They don't care about secrecy. They want the short-term blip. They don't even listen to the presentations. They want volume. Some Directors may have left under the pressure.