Deal structure, financing and earnouts

In this episode, we dive into the world of serial acquisitions with Niklas Savas, an analyst at Redeye, who has a unique perspective on the Swedish serial acquirers' approach.

Addtech AB: Over 150 companies, $1.5B in revenue, $150M in operating profit.

Lagercrantz Group AB: Around 40 companies, $500M in revenue, $50M in profit

Lifco AB: Over 100 companies, $1B in revenue, $100M in profit

Teqnion AB: Around 10 companies, $100M in revenue, $10M in profit

Röko: A private company with a diverse portfolio of 27 companies, more than $500M in revenue

Niklas discusses how growth through mergers and acquisitions (M&A) can open doors to expansive growth, and how Swedish serial acquirers have mastered the art of driving up prices and maintaining high P/E ratios. We also explore the realities of post-acquisition management, the competitive landscape of deal-making, and the advantages of being sector-agnostic.

With his extensive analysis of businesses and focus on expansion, Niklas paints a picture of how acquisitions can fuel long-term growth.

Niklas is also the host of the Investing by the Books podcast, where he shares insights on acquisitions, business strategies, and investment principles with a focus on real-world examples.

Enjoy this insightful conversation with Niklas Savas.

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Timestamps:

00:00:00 - Intro

00:00:16 - Life before resarching serial acquirers

00:03:51 - What makes the Swedish serial acquirers so unique?

00:06:44 - Organic growth vs growth through M&A

00:08:50 - The goal is to raise prices as much as possible

00:12:00 - How can Swedish serial buyers maintain such a high P/E ratio?

00:15:38 - Typical structure of transactions

00:17:29 - The reality of business management, problems that arise after an acquisition

00:19:24 - The biggest daily struggles for Swedish serial acquirers

00:20:16 - Post-acquisition synergy

00:22:58 - Competition on deals

00:27:03 - Which company has Niklas analyzed the most

00:30:00 - How many acquisitions are they trying to make per year

00:33:54 - Expansion into a new country

00:37:19 - 10x growth in last 5 years

00:39:29 - Buying a MOAT and companies with a brand

00:42:49 - Who would Niklas copy if he started holdco from scratch

00:48:57 - Being sector agnostic has huge advantages

00:50:08 - Meet all 200 serial acquirers in person (investors, operators)

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Follow Mikk/PrivatEquityGuy on Twitter: https://x.com/PrivatEquityGuy

Niklas on Twitter: https://x.com/NiklasSavas

This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.