Due Diligence

A Forest2Market bankable due diligence study provides project developers with the data they need to demonstrate project quality for investors and commercial lenders. These studies provide an independent, third-party assessment of supply and demand factors, as well as feedstock sustainability and price. Some of the questions answered by these studies include:

  • Will the wood supply and harvest/delivery infrastructure available in an identified procurement zone be sufficient to support the project?
  • What is the long-term outlook with regard to sustainability of supply? Will wood supply be sufficient over the life of the project?
  • What will the raw materials costs be over the life of the project? How will the addition of incremental demand from this project affect market price?
  • How do I get comfortable with future availability and cost of supply in a market where long-term supply contracts are not standard protocol and usually come at a premium?

Site Selection

Because wood raw materials are typically the largest variable operating cost of a manufacturing facility, siting a new facility in an optimal wood basin is critical. Using a Regional Site Criteria Assessment (RSCA) methodology, Forest2Market works with each client to determine custom criteria and weighting factors to suit site development objectives. The RSCA 

  • Allows graphical representation of any factor or combination of factors around supply and logistics
  • Highlights supply areas that are lower or higher in cost, more or less sustainable
  • Identifies potential sites for in-depth examination of historical trends, current state and forecasts of wood raw material price and sustainability

Market Analysis and Site Ranking

Once potential sites have been identified, or if a client has chosen potential sites before contacting Forest2Market, a market analysis of each site will allow the sites to be ranked from most favorable to least favorable. This analysis includes:

  • A quantification of supply and demand in local markets
  • Current and historical growth-to-removals, an indicator of sustainability
  • Current and historical raw material pricing by product and species, broken down into price components

Sites are then ranked using a site scoring process that allows for each attractiveness criteria to be weighted, thereby recognizing that some criteria are more important than others.

Supply Chain and Contract Advisement

To minimize supply chain risk, a feedstock procurement strategy that ensures supply and mitigates price risk is critical. Large, non-industrial private landowners and timberland investment management organizations (TIMOs) are an excellent source for long-term supply agreements for feedstock. However, TIMO-owned forestland is approximately 4% of total available supply. As a result, wood consuming facilities must rely on a number of private landowners for their supply.

  • Procurement profiles: Identification and profiles of top suppliers, large institutional investor landowners and logging infrastructure
  • Procurement strategies: Current market practices (procurement methods, pricing options, payment terms), best practices, alternative practices, organization of procurement functions, risk managment strategies, seasonality, assessment of logging capacity
  • Contract advisement: Advice concerning terms, conditions  and structure; development of price indexes, construction of incentives and risk reduction and sharing strategies

Market and Policy Drivers

Legislative and regulatory policy shape markets. Often complex and filled with jargon, they can be difficult to interpret. They also change. 

Forest2Market's experts and partners around the globe are well-versed in understanding and explaining regulations and their ramifications for participants in the wood supply chain. These studies also identify risks and opportunities for our clients resulting from policies and policy changes.

Economic Impact Studies

An economic impact analysis is often a critical component to help projects secure grants and permits. Our analyses provide insight into the direct, indirect and induced economic benefits a project will have on the local economy. We use both public and proprietary data data to generate estimates of jobs, income, GDP and tax revenues associated with changes in the level of economic activity resulting from the project or industry being analyzed. Our clients use these reports to secure state or local project permits and project infrastructure grants and to influence public policy at the state and national levels.

Customized Studies and Strategic Consulting

Forest2Market works closely with clients to build customized studies and consulting engagements that answer specific business questions and address specific concerns. Forest2Market can customize a research project specifically to client needs as well as provide strategic advisement and guidance about capital allocation, mergers and acquisitions, new project development, timberland investments and contracting.