The Nordic Compounder Playbook: How Jörgen Wigh Runs 85 Companies With 22 HQ Staff and No Integration

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This is part 2 of our conversation with Jorgen Wynne. Part 1 is linked in the show notes. I suggest you start there. We covered all the foundations of the Nordic deal model. Today is where it gets specific for operators and advisors running programmatic M&A. Jorgen gets into how deal governance works across the 22-person headquarters without creating bottlenecks, why the person who sources the deal always stays on the board post-close, what actually drives deal failures in a buy-and-hold model, and how he'd build this from scratch today, knowing what he knows after 90 acquisitions. Jorgen built the discipline to hold the model through every market cycle. Most teams find out where their gaps are when a deal goes sideways. The M&A competency assessment tells you that before it happens. It's practitioner-built, scenario-based, and it takes less time than a first-round diligence call. Take it yourself, run it with your team. mascience.com. If you're advising on serial acquisitions, running a programmatic M&A function, or benchmarking your own model against the best in the world, this is the one. Let's get into it.

What's the governance look like to get to this go/no-go decision on those deals?

First of all, they should find a deal and they should find opportunity. And then we have a discussion along the way. We have one discussion before putting a bid for the company and another one before signing the LOI. So we have a few important meetings there along the way. Me and my deputy and the core team is, are involved in those type of sign-offs. And before actually closing the deal, we also bring it to the board.

Every deal?

Every significant deal, yes.

Significant. Okay. So there's a line you could get below. And otherwise you're involved, your head of M&A is involved, you have a lead on that deal, you're not integrating it, so you don't have to have—

No, we don't like the handover. We would like the people that are doing the deal to also take care of the deal afterwards. We don't want someone to have made a deal that the operational people don't like.

So this and that person is going to end up on the board, likely, right? Likely. So that's why.

Yeah.

So, okay. So it is a little bit ad hoc depending on who's leading that deal in terms of how you make that decision.

Yes.

Besides this, here's kind of the M&A function in the company. Are there other folks supporting these businesses?

Then it's usually financial people are sort of reporting to the stock market and IR.

I forgot you're public.

We got— Yeah, we're public. And we also have sustainability as a core thing for ourselves as well. So we have a central sustainability resource as well. We are some 3,600 people in the group total. 3,600. And I like to think of it, how many of those are not working in the companies? And that is around 20 people currently.

That's it. You have 20 that is technically your HQ people. Lena, let me, let me ask you.

Yes, she's one of them. Yeah, we might be 22 or something, but they're not here.

I asked, they're not all in this office. They're, they're spread out a little bit.

Yeah, they are. We're getting more and more internationals. One of the 22 is in the UK. We have one in Finland. We have one in Denmark. We have one in Gothenburg and we have one in the north of Sweden.

But generally more Nordic focused, like in terms of your businesses, 85 businesses, where do they end up at in terms of what percentage?

Headquartered or the subsidiary headquarters usually in the Nordics, but we have 10 or 12 companies that are headed out of the UK. We have a couple in Germany and the operations we have in, in the US, we have basically one that is headed there, but otherwise we are thinking of them as more of prolongings of the companies in the Nordic. So there might be their export or a distributor that they might be involved in or something like that.

And you have some out, I think you just mentioned you had one in India or?

That is more of a sales office for one individual company and some sourcing we're also doing from India.

The M&A team, how are they distributed?

They're part of that, that we talked about. The divisions have 3 people. For instance, the international division is consisting of one guy that is working out of here and we have one working out of Copenhagen in Denmark and we have one working out of outside London in the UK.

So you have regional coverage and then in the regions they're—

They're part of the division. So it's not a matrix, but it's still that they are also also heading or having some responsibility for a certain geography as well.

Why are there so many of these roll-up platforms like you have in the Nordics and not in other parts of the world?

Well, that's a good question. Many people ask me that, and it's not that easy to describe. I don't have a strict answer to that. There are a number of circumstances that has made it advantageous to work out of the Nordics. One is the transparency, the openness. I also think that we have a— some people talk about our management style. It's very non-hierarchical, so people feel that they can be open about it and we can work from a distance. The Nordics has always been very international. It is fair to say that, I mean, Sweden is a very small country and therefore we've always been very international. We've always been needing to deal with all types of parts of the world and traveling quite a lot. And that is also helping us here when we are working with these type of companies. Those are a few aspects, I think. It's also about heritage in a way. I think the Bergmann and Bäving Group was put together, which we were part of. So we're actually celebrating 120 years as a company here this year. We were founded in 1906 and we've been on the stock exchange in 1976 doing similar things. And a couple of the other companies have also been founded and worked out of the Nordics. And therefore it's been a bit of a cluster and some learnings from one another over the years. And then it's been building like a cluster and a core competence maybe out of this region. It's fascinating.

The only closest I've seen is in Canada, there's a lot like Constellation Software. You're aggregating a lot of software businesses with a similar model. If you look generally across the globe, it's like here, then you're doing a lot of different types of tech businesses.

You see a few in the UK, you see Halma and Diploma, a couple.

There is some big private equity money in the UK that is funding some roll-ups. I will give credit to that. I know I've worked with IVC Evidencia. Yeah. Tons of acquisitions they do in the veterinarian space. But I was just surprised because I mean, it's a big country, sizable country versus what are we in Sweden, like 12 million people? Yeah, it's not a big country to have so many consolidation platforms. You gave a point on transparency. I do think that financials makes it so much easier to just do initial diligence right away. You don't have to burn through conversations just to find out they weren't even close to what you thought they were financially. The management style is interesting. I have a vendor I'm working with M&A science that does the learning management system. It's an AI product called Sana. They're a Stockholm-based company that got acquired by Workday, I don't know, maybe 6 months ago. And I had an opportunity to go visit because they brought a lot of Swedes over to New York to open their New York office. That's the first thing I noticed. I'm like, there's no— it's so flat.

Yeah.

And it's like I asked him, like, how do you know who to go to? And it's because we're so used to that in the US and I always kind of joke, you don't need to like change anybody's comp when you promote them, you just change their title.

That's it.

Yeah, that's what they want. But it's so different. So different. You wouldn't change that because a lot of your businesses are already in the Nordics. I'm trying to understand the culture of this. Yeah, because it's still hard for an American to understand this because you're just so used to layers. And even for me, the last business I operated and founded was Dealroom. And you start getting to the size of 50 employees and now you have like middle management layer and you have to accept inefficiency in a way. Can you give me a walkthrough of the culture and the management model and how that actually works in the Nordics?

I think it is hard to describe. We don't have those big differences really. We don't have genuinely that poor people. And that means that everyone has a chance. And if you do, school systems are— we're pretty equal in a way, I would say. And that means that people are not that necessarily that financially driven. People are more driven by doing something that they feel is good for themselves and building something. They are more occupied with those type of things rather than to get tremendously rich.

I noticed that there's definitely a lot to say about that. It's like the culture of equality or like essentially progressive. Obviously there's gender equality is very progressive in the Nordics. Yeah. And then if you think about that, even within a business, you feel everybody has a role versus this emphasis on hierarchy where it's all the CEO's got to drive a Bentley around and fly around.

We don't find many. You don't find that many Bentleys here. No, some nice SUVs, but everyone buys a Volvo.

There's a lot of Volvos.

And it's a good car, but it doesn't stand out, right?

It's very inconspicuous.

Yeah.

No, you're right. That is a big part. So there's a sort of cultural There's a lot of minimalism. I noticed the design. Obviously there's like Nordic design.

When you look into academia of these type of companies, ourselves and other companies, many people talk about frugality. That has also been written quite a lot about sort of Constellation in that sense. Also North American type companies. But it's actually part of the culture that you don't run it in a very hierarchical, you're part of a big team and there is some equality to it. Not all the way, but to some extent.

That's a good point. Those are some big differences in terms of management styles of the businesses. Do you end up with smaller teams in these businesses because of that? And I'm trying to get this back to like M&A. Like how does this make it easier to sort of buy a business that operates so flat?

It is good in a way that, I mean, you view one another as colleagues rather than that someone is the big boss and everyone is sort of looking up to that. It's about feeling that we are building something together and It's great. Everyone, you can be a part of that. It's actually, it's very challenging, but also motivating for you as an individual. And you're getting a fair pay and you're not getting tremendously rich here, but you're making big money slow is sort of a wording that has been put together with these type of companies.

And you get a lot of time off.

I do.

So what was the thing I heard? If you have a kid, you can take 6 months off if you need to.

Usually you get 12 months or whatever it is, and you can split that in between the parents.

Wow. So there's definitely some favorable work-life policies here, right?

You need to take care of the next generation.

Yeah, it's part of it. You get happier people, so that adds to it.

Yeah, the Finns and the Swedes are among the happiest people in the world, they say. I don't know how they measure that actually, but I'm curious.

But generally when you meet them, they— I agree, they are very happy. The international culture, I think the one thing I noticed too traveling around Europe is The Nordics, it's very autonomous between their local language and English. There's like a zero-lag switch when you go to somebody at a coffee shop and you just start with a little few words, but then they figure out quickly and they just write in English. You get that good as well in Germany, but then when you go to Southern Europe and it changes quite a bit. That's probably another big part. I feel like that becomes the common language when you're doing deals cross-border around Europe.

Yeah, it is.

What else can you teach me? Like cross-border deals? Because I feel like doing deals within the Nordics, there's sort of a general culture I can acknowledge in Scandinavia, some subtle differences between the countries.

I think for us it's been very important to always put business first. That comes also to when we are talking about sort of doing deals elsewhere, that getting into some of the Anglo-Saxon countries, the whole legal paperwork of doing deals is just much more tedious. And that is a problem for us in some markets. I'd like to think of us that we would like to make an SPA, share purchase agreement, in 30 pages. When we look into some of the UK or the North America, it's usually 300 pages, just to make a simplification of the whole thing. That is also a big advantage for us in the Nordics.

This is new. I have not learned this because I have done interviews in Germany, France, other parts of Europe, and it tends to be, I feel like, more a lot more negotiation back and forth than the US? I feel like it's— they're long agreements, but they tend to move fast. It's tend to be like, okay, this is market, this, and then you negotiate, you move pretty quick. But I feel like some of the countries I've talked to, it's just more formality, takes longer.

Yeah. I don't know why that is. And I've been in a few situations like that, but I don't have the full picture really. But that is my sense that we try to be very business-oriented in getting things done here in the Nordics. And that also helps. We would like to have the businessmen negotiate the deal. We don't want the lawyers negotiating the deal for us.

How long does it typically take to get a deal done?

From an LOI to a signed deal, we are targeting some 6 weeks.

Yeah, that's a pretty fast pace.

Yeah, yeah. Some people do it in 3 days, but then I don't think you— you need to do due diligence in an orderly fashion. Yeah.

Cultural differences. I feel like it's like the crux of M&A. Like if you can learn to do deals with somebody in a completely different culture, You're hitting the core of what M&A is, which is really people-to-people business.

Yeah.

Like it's obviously the numbers are there and this and that, but there's just—

And especially now when we're talking about these entrepreneur-led companies, very local, very much families and stuff like that. So it's owners-led companies that we are acquiring. And that means that we really need to get along and understand the people that sell the companies to us. In that sense, I think most people think that, and I do as well, that most business is local. We need to be local, and therefore we have decided to have basically someone leading in each of the countries, that we have someone that is local as well, among the same number of people that we talked about, but still someone that is local.

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And that's that part of it. That's what I was wondering. Is there a sentiment that, oh, like with the Danes, right? If it's Danish, Swedish, like there's— I watched the movie Stockholm Bloodbath. My fiancée's Danish. And I was like, if I was the Swedes, I wouldn't be happy with the Danes around this. But it's fun. Like the banter, I guess. I'm wondering, like, does that come across in business? Do you have that where it's, oh, I don't know, the Swedish company is going to buy it?

Yeah, we get some of that. Of course, it's in the further away you get, the more difficult it gets. Of course, we have similarities also culture-wise. Have we been a sort of a Western country for many years? Have you been having democracy for many years? All kinds of things. Do we have the same religion? All those type of things come into play. We have decided to stay in the sort of more of the Western type world. That's where we would like to be. But I mean, we see differences when we come from Stockholm going to Gothenburg. There is some differences. If you go to Denmark, there are some, a little bit more differences. But most of it is more similar than different. There are small nuances to it. And the nuances, and where it's become difficult is when people are not agreeing. When you disagree on something, then people usually bring those type of things up. Is it because you're from Stockholm or is it because you're Swedish? Or it's, that's why you think like this. We're different here in Denmark, but I'm not sure they are that different. The similarities are much stronger than the differences.

I agree. I think broadly so.

Yeah.

That's why I was curious if you ever get like a resentment. No, we're not going to sell. I want to have a countryman buy this business and keep it with them.

Some people think like that, that's for sure. Every country, every type of people are proud people. They're patriotic to some extent. We're patriots here as well. So it's not all necessarily bad either. It brings some self-esteem and some strength. Goes for sports as well. Would I sell my company to a Liverpool fan or would I not?

I was going to ask, what do you do to bridge culture gaps then?

I'm not sure we do anything over time that since we are, yeah, learning English in school and we travel quite a lot and we have interactions all along, we have much more of international trade than we used to have. So along the way we're building bridges, but it takes time. We get to know one another and embrace it. Yeah, right. And we meet, of course, and we do team buildings together at our MD conferences every year. We do team building and that brings people together even though they might have different backgrounds.

It's almost like having a culture of embracing culture as part of the company. Company culture.

Yes, it is. It is.

And then you got to carry that with you when you approach these companies because you're introducing how your business works. And that's pretty interesting. We talked through the team structure and the M&A teams that you've done. We've talked a little bit about why the model works well in the Nordics.

Have you had any other angles to that from someone else or sort of other ideas around that? That's really one of the most common questions I get from international investors. They look at the Nordics and say, it's just tremendous how many companies you have doing this. And why is that? And I don't think I get that many answers. I'm getting the question and then sort of what other things do you think come into play here?

Maybe it's the Swedes. They're friendly. They're easy to work with. Maybe a little too friendly sometimes.

Yeah, we are.

Yeah, you got to—

Rather that than the opposite.

That was the one thing I was very surprised. First time I came to Stockholm, I was like, wow, these people are so friendly. Yeah.

I actually worked with a guy, he grew up in former East Germany and then he had been working in Denmark, he'd been working in the UK and then he found his girlfriend in UK. He was in software. They got together and they were expecting kids and they Googled where is the best place to raise a kid and then they found Stockholm. They found Stockholm. So they just moved here.

I love the Nordics. It's great. I really would like to spend more time, just go to northern.

Yeah.

Sweden and ride the sleigh with the dogs.

Yeah, you heard about that. Have you seen it?

I haven't seen it. I haven't seen it. I want to, I want to go take in nature. I did get a chance to go to Norway last year. I got to do some skiing over there. Now I know why they're such strong Olympic contenders, because if you can go train and ski in the mountains, it is extremely cold.

Yeah.

Going back to your question, I had a couple, they're both Swedish. Live in Switzerland. Both of them are advising various consolidators.

Yeah.

And I had the same question. The big one they leaned on was that transparency on the financials. They're like, it just makes it so much easier for you to find the companies and do a deal. That was a big one. And I can't remember what the other ones—

and it's actually from a society perspective, I actually think it's a good thing because that sort of helps in the capital markets. If people can understand what's going on and have the transparency, and that actually drives the capital markets to new levels. I think the entrepreneurs, we hear quite a lot now about a lot of new startups in the Nordics as well. It is actually an entrepreneurial society.

I have a bias because I came up through software. I did M&A as an advisor for about a decade, and I spent 12 years founder CEO of a software company. And I find it to be really hard to do what you're doing. I've seen it work with like the Canadian companies, use example, but they're buying businesses that are tapered out. They're not high growth by any means. They're in a high growth category, very high multipliers. And like you said, it just, it doesn't really sit well. What you have makes a lot of sense. Like these are stable businesses. You have a good target growth year over year and you're buying them at a price that makes sense. It's sustainable. I think that's like the big difference is like you have to own it It makes it interesting too, because you're very diversified.

Not only in helidex protection system.

Yeah, that's the thing I see in the US. It's you're consolidating one thing. You're the air conditioning, heating repair, your pool installation. You know, you're buying just specialized healthcare clinic or private schools, and then you just focus on consolidating that. You build your story of how you're getting so many synergies because you get to consolidate all the marketing and all these things.

Yeah.

We don't do that at all, but it still works.

It does. And I think it's about the strength in— if you're running a local company, you should be able to make your decisions close to the customers, close to your markets, close to your employees, and have that autonomy there. And the motivation and empowerment that empowerment gives you is so much stronger than any synergy. That is the thinking we have. And that's why we don't talk about synergies, cost synergies. We share things and stuff, but it's not like we're driving synergies.

You mentioned the other platforms you told me about, like the LyftCo, the Intratrade, the one you were a part of, Bergmann and Beving, ad tech. Are they similar in terms of fundamentally operating as a similar model in what we described to profile businesses, just maybe different businesses?

Yes. Yeah, they are. We are doing things in a very similar way.

The software one I did last year in Norway was Visma. I had, I had a Corp Dev on and it's similar because there are these like really obscure accounting software, very niche.

There's also in the academic world, it's been talked about being a programmatic or a more of a roll-up. And the ones you're looking at there are more of roll-ups while we are considered to be a more of a programmatic serial acquirer.

Okay.

So we can contrast programmatic versus roll-up.

Yeah. In a way.

Because you're programmatic in Sensei.

Yeah, we have a program. We are putting together some, some type of key concepts around how we do things, but we don't integrate. In the rollups, you're more integrating. My understanding is that, or I'm pretty sure, is that Livco and Adtech and Indutrade are doing the same type of programmatic sort of setup.

In private equity world, they like to use this term, the 100-day plan. Yeah. So do you have a similar concept?

Well, it depends on, I mean, all investments are unique in a way. So if we find something that we actually need to fix, And we see this is very tangible. This is what we need to fix in this company. We might have a 100-day plan.

Okay.

That we are really changing something. It's more of, we do that in conjunction or together with the former owners, but we might have something that we feel that is really necessary to change.

Otherwise, if it's incremental, you don't need a 100-day plan. Just introduce some people, let's work together.

Yes, but still challenge. We are working with business plans in all our companies. So we are putting together a business plan once a year in each company.

You're on the board of the Bergman Beving? Yes. And that's where originally Lagerkrantz carved out of?

Yes.

Okay.

Yeah. There were some spinouts in 2001 where the former Bergman Beving became 3 companies. Lagerkrantz was one, Adtech was another one, and then there was a B&B Tools. And then that went on for a few years and then they took the name Bergman Beving back. So that's also listed.

Wow.

And then Adtech spinout AdLife, which is also on the stock exchange. And then we have the B&B Tools also spun out the Momentum Group, and the Momentum Group spun out Allego. There's actually 6 companies that have the same heritage.

Wow.

And have the same type of culture, or yeah, not the same, but similar type cultures.

They all Bergman coming in.

Yeah, you're right.

Your board role at Bergman and Beving, how does that relationship work? Did you get things you learned from it that helps you out and vice versa?

The main type of owners are the same for the different companies. So there are some commonalities when we talk about owners. And then I also was part of, yeah, I was sharing the company and then, yeah, the CEO of Bergmann Behrman used to work here as well. He was my former head of M&A.

I'm just trying to get a sense of like, no conflicts though.

There are some things we need to be aware of. Magnus, which is the CEO, he's running the M&A and he brings only I mean, we look at, sometimes look at similar cases. It's not like we share that until we are exclusive. So it might be that we're exclusive here with something or he's exclusive with something there. Then it's not a problem at all.

What's the value add of you being on the board over there?

Our way of working is in a way unique. It is very different in a way. That's what we all bring to the board there, that we know how to run this type of things and therefore we can learn from one another and make sure that we are aligned in terms of how we would like to run things.

So you're there Typical board challenge and kind of, yeah. How has your job evolved? If you look at when you're like 5 years into it versus now, I know we talked a little bit about you had 2 big eras of optimizing the core business in this essentially turnaround situation, and then you've really been scaling up at M&A. Yeah. But I guess how has that looked like if you looked at what it's really evolved in your pragmatic approach to doing M&A?

There has been different phases. The first phase was around Yeah, doing the decentralization. The company had become to some extent centralized. We were doing some central IT systems, we were doing some central warehousing. We did a couple of different things that we needed to decentralize again. I wanted to empower the people. So I worked quite a lot with finding the right people in all the sort of parts that we had within the business. We were around 12 or so different business units back then. It was about challenging and putting plans together. But also exchanging a few people that we needed to— we needed different set of people, broadly speaking, but in a couple of instances we needed to do that as well. Then it was about finding the strategy to find a new type of capital allocation criteria going forward. So it was about finding companies that have a proven track record, had the long product life cycles, moving away from electronics with very short product life cycles. We wanted something that is long and more stable, more of consistently produce good cash flows. We've got into much more proprietary products. So we changed the focus of the M&A. That's what we did really early on as well, but evolved a bit over time. And then the last few years has been about scaling and doing even more of decentralization. We need to get the divisions going. We need to get the people out in the different companies going. Also being, yeah, partly industrial, but also partly thinking like an owner or thinking like an investor. So we are doing that setup as well now. In combination with that is also about becoming more international. So we need to do this in other geographies with other cultures or somewhat different cultures from what we have been used to. So it's been a number of different phases. It's been really fun.

Yeah. It's just a lot because the more you grow, the more pressure you got the same capital allocation and do more acquisitions.

Yes.

What other countries are you optimistic about that the same playbook's going to work as well?

I think we have a number of companies. When we look at our peers as well, we are the small ones out of the 4 big ones. We're the smallest one in the trade. Lyftgo and Adtech are like 2 or 3 times the size of us. So we have a lot of runway to just get us to do what they've been doing and looking at them a bit. That works. But then also see that they have come further in their geographical expansion. So they are more present in Central Europe. They are more in Germany. We have very few companies in Germany. We would like to get going more in Germany. The Netherlands is another area. Not only you look at the map, it's not that big, but it's quite densely populated and a lot of companies out there. We have not been in Ireland or any of those markets, but the UK we are at the moment. And then many people are thinking of Northern Italy, the DACH area with Austria and Switzerland and Northern Italy. And some companies are already there. We have been there a little bit looking, but so far we haven't done very much there. And if you, some people made a look into how many small and medium enterprises that are in those markets and there is so much more to do.

Wow.

Yeah.

That's fascinating because it's just, you're touching.

I mean, we went from being Nordic and looking at the Nordics and we went to the UK and the UK is basically twice the size of the Nordics. Our hunting grounds, if you call it that, is like our definition of our scope geographically is just tripled in just a few years.

If you had to start from scratch. What would your thesis look like today?

There are a lot of opportunities out there, but I think it's also fair, it's quite a few years of really hard work to get going.

That's why I feel like—

you don't have a name for yourself. It's really a lot of things you need to build. I think you're looking at at least 10 years before you're up and running.

I agree. You definitely— what you built, it would take a lot. I'm wondering if there's a market opportunity of some little niche within the niche you could find. Get going. Is there something like that?

Probably. If you're thinking more of doing a roll-up or things like that to consolidate some market, there are probably a few you could look at, yes. But that's a bit different from being programmatic. I think the beauty of what we're doing is we can and we are pretty opportunistic. We look at a good company, we find a good company that we think that we can handle that is within our sector. And it's usually, we try to fit it in within the scope that we have.

So starting a similar strategy, what you're doing in terms of programmatic M&A would probably be really difficult in this current market as opposed to doing a traditional, like a roll-up play where I feel like is the current flavor of the time. And that's where I feel like you could give it that. It takes you a long time to get there. And then you're right, maybe it's more of you find a little untapped niche that's more of a roll-up play. Otherwise, you got to be really good at finding really good deals. That speaks for itself. We didn't talk about this nature of being publicly traded. I always wondered about, do you correlate how your stock is performing against how much you would pay for a company?

Each deal that we are doing is actually very small compared to the full size of the group. So it shouldn't correlate that over a long period of time. If we just would bring up our multiples, and do that for 3 years, then it will make a difference. Interesting. I think the correlation is actually us just driving earnings per share. It is very correlated to the earnings per share long, long term. And that's why it's hard. We have a portfolio of 85 companies. It's not like an analyst or an owner can really understand everything that we have in the portfolio. And I say, I like these 3 companies, so therefore I buy LogiCrown instead of something else. That's not really happening. It's our performance over a long period of time in terms of earnings per share and cash flow per share growth. That is the correlation that you see.

That makes sense. So you're focused on making the money, right?

And that means that we are not that occupied with— and that's why we don't have an exit horizon. We don't want exit, making money out of exits. We would like to build earnings per share and really drive the companies that we have within the group. And that also fits well with the sort of the thinking we have around being a perpetual owner. That is really attractive to some of the, in the M&A market.

Yeah.

People like that. We really take good care and we're in it for the long run.

Great model. Do you have more stories about deals you've done? The helicopter pad company was pretty cool, but I'm just curious of other deals that you've been pretty proud of in your portfolio.

We got to know a family south of Stockholm here that had a really great company. They have been more of a very stable, good old business that they had, but they also been working with finding a new area. That they've been pounding that sort of initiative for 10 years or so. And we got into a long discussion, getting to know one another and really like one another. But when we were about to close the deal, the guy, yeah, he felt that he didn't get paid enough. So he backed out of the deal. He actually got cold feet. It was his life's work. But we went back and we tried a second time. And again, he backed out of the deal. Took 6 months. And maybe a year, year and a half later, we actually made the deal. And that was like, yeah, being persistent, but also being patient in a way that got us through there. And now the area that they've been pounding, that they really, that is the one that is really taking off for the company. So that company is doing basically double, double up in terms of the performance of the company since we acquired it.

Turned out to be a win.

Yeah.

You got a deal you regret doing?

I have a couple of those as well.

You don't have to name them, but I guess—

No, no, I think it's, you need to understand if you do these type of models and you're buying 10 to 12 deals per year, you have a failure rate. You need to allow, and that's very un-American to say that, but there needs to be a failure rate.

Is that failure rate usually because, hey, this market dramatically changed or this management team changed? What is usually the driver of the failure rate?

Yeah, it is a couple of those things and it's hard to tell. It might just be bad luck, I don't know. Things look very good. You think you have things under control and then something goes wrong. We would try to have the failure rate around 10%. Okay.

1 out of 10. Yeah.

1 out of 10. And then we try to measure that and then you need to depend how you measure it. We had one measurement. Does it add earnings per share in the first year? Was one. But I don't think that's a bit— it's not good enough to have it as a criteria. So I'm thinking more sort of deals that we regret doing. Yeah. Couple of things that we feel that is important is customer concentration we're afraid of. We also see some disruptive sort of technologies around the corner. We are dealing with tech and industrial companies, so there will always be technology development and new technologies coming on stream. That is part of the game. But then if it happens in the coming 3 years, then we don't consider it to be a good deal.

Yeah.

This is making sure that there's a long-term outlook on the business.

Yeah.

So I gotta ask you, Jørgen, what's the craziest thing you've seen in M&A?

Craziest thing I've seen in M&A. Running in a company like this, I think staying disciplined is actually very, very important. So when you see people come in and you've seen people think that they can do this like 3 times of what we're doing, and they just get a lot of money and they just go out, buy basically anything, that's really difficult. We've seen people doing do diligence in 3 days. That's, I think, just reckless, if that's the right word.

But it's like reckless or gambling, I guess. Yeah, you're right. I've seen in auctions, yeah, we're just, yeah, I don't know if emotions take over and people want to ego to win, and things can easily get crazy otherwise. But the key is staying disciplined.

It's important that you really take the time to understand one another, buyer and seller, and that you spend time together and that you Enjoy being together and think that you can take on someone's life's work and really do something good out of it, make something good out of it or better out of it. We are buying really good companies and making them great. So it's more of that transition really.

They're very organic focused. No valuation triage or real games to play.

No.

I appreciate taking the time from doing deals to have a conversation with me, helping me become a better M&A scientist.

Thank you.

Hey, if you're still listening to this podcast, my fellow M&A science brothers and sisters, love to hear from you. I'd love to hear feedback. Let me know what you thought of this interview. You got other ideas of interviews like this I should pick up, other topics I haven't covered yet, reach out to me on LinkedIn. I got my privacy thing off on LinkedIn, so just mention you listen to the podcast and I'll accept it. Till next time, here's to the deal.

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