Feed mill due diligence

Due diligence on a feed mill under a signed letter of intent has one job: confirm that the licence, the contracts and the equipment described in negotiations are actually what closes with the deal. That means pulling the CFIA licence file directly rather than relying on a summary, testing whether grain and customer contracts genuinely assign to a new owner, running the registry and lien searches any acquisition needs, and getting hands-on with the equipment rather than trusting a maintenance log alone. The findings below are the ones that most often change a feed mill deal’s terms or end it outright.

The licence file

Request the complete current feed licence directly, including every condition attached to any medicated-feed mixing authorization, and cross-reference it against what was represented during negotiations — conditions limiting product range or volume are sometimes left out of an early summary. Ask for the facility’s CFIA inspection and compliance history, not just the current licence status, since a pattern of past corrective actions is a better predictor of future issues than a single clean snapshot taken in isolation.

Contracts

Every grain and input supply agreement, and every customer delivery agreement that isn’t purely informal, needs to be read for an assignment or change-of-control clause, not just confirmed to exist. Where a contract requires counterparty consent to assign, get that consent in writing before closing rather than assuming it will follow — a supplier or an integrator customer that stays silent until after the deal closes has far less reason to agree on the seller’s original terms once the leverage has shifted.

Registry and lien searches

• A Personal Property Security Act lien search against the mixing, pelleting and delivery equipment being acquired, to confirm it isn’t already pledged to another lender
• A corporate status and good-standing check on the selling entity
• An execution or judgment search against the seller, to catch outstanding judgments that could attach to the business
• Confirmation of any environmental or dust-control permit tied to the specific facility, not just the corporate entity

Equipment condition

Maintenance logs establish a paper trail, but they don’t replace a physical inspection of the mixing and pelleting lines, the delivery fleet and the grain-handling infrastructure by someone qualified to assess remaining useful life. The gap between what a log says and what a mechanical inspection finds is where an unbudgeted capital bill most often surfaces after closing, and it is one of the cheapest checks in the whole diligence process relative to what it can save.

Findings that kill deals

A history of CFIA compliance findings tied to medicated-feed mixing, especially anything unresolved, is the finding most likely to stall or end a deal outright, since it puts the buyer’s own licence approval in question. A grain supply contract that turns out not to be assignable, an integrator customer who confirms during diligence that they’re moving volume elsewhere, and equipment that an independent inspection values well below the maintenance log’s implied condition are the other findings that most often send a deal back to renegotiation or off the table entirely.

Medicated-feed record-keeping, not just the licence itself

A current medicated-feed mixing authorization is only half the picture — a mill authorized to mix medicated feed carries ongoing record-keeping obligations under the Feeds Act framework covering what was mixed, for whom, and at what inclusion rate, and those records are what the CFIA actually reviews when it assesses whether the authorization should continue under a new owner. Request the mill’s medicated-feed mixing and formulation records directly, not just the licence certificate, and look for gaps or inconsistencies rather than assuming a valid licence means the paperwork behind it is complete. A mill with a technically current authorization but thin or disorganized mixing records is a materially different diligence finding than one with both the licence and a clean, complete record trail, because those records are what a buyer’s own future compliance file will be judged against once the authorization transfers.

Check the health of the customer base’s home sector

A feed mill’s customer list can look stable on paper while the underlying producer base it depends on is quietly shrinking, particularly where a meaningful share of customers operate in a supply-managed sector — dairy, poultry or egg production — that has been consolidating into fewer, larger barns for years. Look past the current customer count to how that count has moved over the past several years and whether the trend is consolidation among the mill’s own customers, not just attrition to a competitor, because a shrinking local livestock sector is a structural headwind no amount of service quality fixes. This isn’t a reason to walk from an otherwise sound acquisition, but it belongs in the same conversation as customer concentration, because a mill serving a dozen producers today that’s on track to serve far fewer in five years is a different asset than the same mill in a stable or growing region.