The Nordic Compounder Playbook: How Lagercrantz Bought 90 Companies and Never Sold One

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This is part 1 of a 2-part series. Part 2 drops next week, June 4th. Today we're covering the deal model. If you're running programmatic M&A, advising serial acquirers, or trying to hold pricing discipline when private equity shows up with a bigger number, part 2 is the operating culture behind 85 autonomous companies and why this model works in the Nordics when most attempts to replicate it fail. Make sure you're subscribed so you can get notified when it's live.

Today I'm joined by Jorgen Vig, president and CEO of Lagerkrantz Group. It's a NASDAQ Stockholm-listed tech group that he's led for over 20 years. Under his watch, Lagerkrantz has compounded from a small spin-out into a business doing over 10 billion Swedish krona, over a billion US dollar revenue. With 85 niche B2B tech companies across Northern Europe, the US, China, India. He's done more than 90 acquisitions, delivered 15 consecutive years of record earnings per share, and built one of the most disciplined serial acquirer models in Europe, all while holding every company forever. No exit horizon, no flipping, no integration, just compounding. He's also chairman of Bergman and Beving, which makes him a front row operator in the Nordic compounder ecosystem that includes Lifco, Intutrade, Adtech, and Lagerkrantz itself, a category that's quietly outperformed global markets for decades. We're getting into how the model actually works, how he holds pricing discipline when private equity shows up with term sheets at 11x. How do you operate 85 autonomous companies without a central holding company tax? And why this model has worked so disproportionately well in the Nordics. In this episode, you'll learn how a 20-year operator runs a buy and hold forever acquisition model at scale, how to win proprietary deals against private equity, hold pricing discipline through market cycles, run a decentralized portfolio of 85 companies, and why the Nordic serial acquirer model works when most global attempts to copy it fail. Jorgen, how are you doing today?

Thank you for having me.

That was a long intro. I hope we cover all this stuff. One, thank you so much for hosting me live. We're here in Stockholm at YoungerCrans world headquarters. Can we kick things off a little bit about your background?

I grew up in a small rural community in the midst of Sweden, and then I studied at Stockholm School of Economics. So I'm a I've done some finance and stuff over the years. I worked some years, 5 years or so, as an analyst, doing a lot of valuation of different companies. Then I joined McKinsey for a couple of years, and then I was recruited into this by Mr. Anders Bergeson, that was behind the Bergman and Biering Group, being the CEO and for that company for, yeah, plus 10 years or so in 1998. And then we worked together for some 3 years. And then after that, we decided to do the spinout. So I was part of the spinouts that has been talked about a lot about from the Bergman that is consisting of a number of companies, 5 or 6 different listed companies, all doing different kinds of compounding over the years. I left the group in 2001 doing my own thing. I had done some pricing work before, pricing and revenue management consultancies. I also got that part into it and founded my own company called PriceGain that I was part of founding. Worked for some years there, but then I was recruited back into Lagerkrantz in 2006 and have now been the CEO for, yeah, a little bit more than 20 years.

That's quite a transition experience. You got it firsthand with the spinoff, then you started your own business. What prompted the transition from leaving your own business and then going back to Lagerkrantz?

I have always been fond of this model and how we work. I really wanted to get going with building it for myself and be part of it fully. And when I got the chance to come back as the CEO there, I had founded my own company before, so it was a bit of a difficult decision to either run my totally independent, my own company, or together with a friend we had it, or to come back and really do the compounding and really get going with Lagerkranz. And Lagerkranz has faced some challenges after 2001. We were as a separate listed company, we were struggling with low margins, or the company was struggling with low margins and not the very great performance. So it was also a bit of a turnaround that we, we had in front of us. And that I found challenging and, and from a professional perspective, quite interesting.

You wanted the challenge and you had an itch for M&A. Was that Always part of the thesis to get out of it.

Yeah, we really needed to go back to the foundation, the roots where we came from. We're doing a lot of decentralization, working with management by objectives and those type of frameworks within the group. So we decentralized the whole thing. We made sure that we really made the companies independent, working in an autonomous way in each of them. And we also changed the direction of where we did our capital allocation. So we went from things that we felt were a lot within electronics with short product lifecycles, things changing all the time to really get something that is more stable and that have consistently and over a long period of time, good cash flows coming out of it. Building that step by step, we actually changed the content of Lagerkrantz dramatically from 2005 up until 2015 or so. Then onwards, we have consistently built through more proprietary product type companies as opposed to maybe doing more of value-added distribution and the other type of companies earlier on that we felt didn't have the same opportunities for growth and profitability.

So a lot of it was fixing the core business that first decade and really optimizing what that business looks like. You even mentioned where you're focusing on which business lines that are rapidly changing, probably lowering a lot of R&D overhead you run into. In the last decade, you've been accelerating with a lot more M&A. Yes. But you're able to do that because you have a strong base of business.

Yes.

Can we talk about the business model? You have 85 companies.

Yeah.

And your model is to acquire and hold forever. Can you walk me through, I guess, how do you think through that business model and why does that logic work?

It's a beautiful business model. I'd say it's a model where we are looking for really good companies and have a sort of a great perspective on them. We would like them to work independently. We would like them to have a strong management team. We want them to work under their own brand name and they're dedicated to their own market. With a dedicated local management team running the thing. And we can be supportive of them, we can help them with some aspects of their business. People have been very domestic in their approach, and we try to make them more international, or we try to find other ways of growing the companies. But it's run autonomously in a local sort of framework. We are good at following up on the companies, we're good at challenging them in terms of setting the targets, getting the right people on board. And grow the businesses. And the ambition we have is to grow profits every year by 15%, which means that we double our profits in the group every 5 years, roughly. There's a combination of organic growth and inorganic growth. We have broken that down. So we think that basically one-third of the growth should come organically and two-thirds inorganically out of acquisitions. And that means that we should basically acquire some 10% of ourselves every year. In order to grow the business in that pace.

All right. This is— so you know the business.

Yeah.

I want to get this right. So a lot of these businesses, a common element is that they're very localized, that you have a local team that runs it and that you have a commitment from that management team. And then you factor in broadly how much you're investing in for inorganic growth to keep adding on those businesses. What must be true about these businesses for you to be interested to buy them beyond like the local management team? Is it other things about the, how the business operates, financials, and—

We would like the companies to be strong in their, we always talk about niches, but we talk in parts of the market where you actually have a strong player and we would like them to be B2B, either industrial companies or tech companies. Everything that we do is actually within hardware. We have not been into software that much, but basically the core foundation is within industrial companies. And the desire for strong market leadership and strong players in the market translates into that. We also see some consistency in terms of financials. So when you have a strong market position in a niche and have that year in and year out, that usually translates in really good numbers. We're actually looking for companies that have very good numbers. So we are looking at companies that have an EBITDA margin of plus 15 to 20% or so, and we would like to build through that. And that usually translates into good cash flows. So we can take that cash flow out of those businesses that we already own and put that into new businesses and maybe acquire them at 4 to 8 times EBITDA. And that usually translates into that we have a capital return on capital employed of some 20% or so.

When you say niche, can you gimme an example? What's the business you find interesting in your portfolio?

Yeah, we have a number of them, but just to give you an example, we found a company a couple of years back that is really strong in building different type of security and safety solutions. Or helicopter decks offshore.

Okay.

So think about the company, a vessel, or it might be an oil platform, it might be a wind turbine situation where you need to land with a helicopter. Those are very rough environments, a lot of ice, a lot of wind, a lot of bad weather. And there you need to have a safe environment to be able to land with a helicopter. And that means that you have the circle and H lights around where you land, you have the nets that is covering the platform and you have perimeter nets around that. And this company has just been— it's just the market leader of building these type of solutions for helicopter decks offshore. And that usually translates is that they're very known in their niche, in their market. And that also translates into that they are doing some great business in that specific niche. And it's a global niche. So they are all over the world with these solutions.

That's a great example. Very niche.

Yeah.

With that management team, when you look at these business, What's the nature of it? I think of businesses where a person's looking to retire, a founder business situation. I guess, what do you typically buy into? Because a lot of times people want to retain a management team, they want to have some continuance of the business.

It's fair to say that many of the companies that we look into are also very established sort of brick-and-mortar type businesses. So it is usually in some type of succession planning that they are for sale. They might have been run by 3 generations of a family. But eventually the family is so broad, there are so many siblings, and it just gets too complicated to find a succession in the next phase. And usually the sons and daughters are maybe not always, but sometimes not that interested in running the business. They are doing other stuff in life. And then we come in there and then we have like a transition period. We work with them locally. We have built a great trust. Most of the sellers want the company to be kept as it is, basically. They don't want to take down the sort of brand name of the company or move the company or lay everyone off and integrate it with something else. They want the company to continue doing what it's been doing for decades. That is like a very common situation where we come in and then we usually work with the family before acquiring the company for some time. That might be 3 months or it might be 3 years or it might be 10 years, but eventually we usually get through. And then we can acquire the company and then we usually work with a transition period where we have some earnouts and setups. That means that we both sellers and buyers are working together with the company for some 3 to 4 years or so before we actually take over fully, or that we are, it's not, we might own 100% during that time, but they are incentivized through some earnouts, other types of arrangement.

For about 3, 4 years.

Yeah.

So you'll still keep that principal around for a period of time.

Yes.

I'm curious about the model where you run these businesses as independent businesses. Essentially, integration isn't the big driver. You're not doing big layoffs and the typical slashing. And then you don't do any of that. Have you ever heard of a thing called synergies?

Yeah. Yeah. Sometimes we talk about synergies as well. You do some add-on acquisitions. Sometimes we talk about synergies, but we are not looking for synergies or synergetic acquisitions. What we add when we acquire a company is typically talk about that. We try to add two things. We try to add energy and we try to add structure to the companies that we acquire. And that means that these companies have, as said, they've been owned by maybe the same type family for generations. Fair to say some of them have been sort of, yeah, they're very accustomed to running their business. They know everything about the business. They don't have the full sort of control. They don't have this follow-up systems that might be modern or necessary for the company. They know it by heart. So it's not like it's overstructured and we can maybe follow up. And there's usually some key dimensions of the company that we find that we can improve. It might be inventory control, or it might be that we think they can do better in pricing or different aspects of the business. So what we also add then is energy. We add sort of ambition to the company. We would like the company to grow. Many of the companies may have been addressing a domestic market. They feel that they have had a good dividend from the company, it's been going on for years and they're getting a good dividend. They are someone in their community, they're really appreciated by the community, by their workforce, but they have not been overly ambitious in terms of growing. Sometimes we set up that they should grow for a new, new market or new geography, or it might be that they address a new segment. Lots are happening in different segments. Electrification is happening all over the world. The green transition is happening. We are investing quite a lot more into defense. So some of our companies are looking into that, or we might find other opportunities. AI might be something that we add to the company that has not been there before. So we add ambition, we add energy and drive it through that. But we usually do it in combination with also keeping what is very good with the company. Might be the management team. It might sort of be someone in the family that can be part of the local board and work together with the former owners.

Operational optimization and then also reviewing the strategy, see if there's a different lens in looking at that. When you say structure, as always, it's kind of the energy. You're taking the initiatives and organically improving the business. How about elements of structure?

Is there—

I'm still trying to buy into this because I'm so used to talking to PE firms where You can't build a conglomerate of businesses. That model is dead. You have to have some strong synergy drivers. You gotta really figure out where you're doing a consolidation play and you're eliminating a bunch of costs or something. I feel like that's the normal. You're not doing that. I'm trying to figure—

Yeah, I'm doing a bit of the opposite actually.

Yeah. Yeah.

The structure, it comes from, for instance, we put together like a reporting system that we put into place following up closely on order intake in each company. So we are getting order intake every week from our companies. We're doing a simplified P&L and balance sheet every month. Then we do a full P&L and balance sheet every quarter. We are following up on cash flow and cash flow tighter than they have been most times. And that means that we also are better maybe to create the early warning system and adjust the company or the resources of the company when needed. If they are either growing or that they see some slowdown in the market, we are more agile in that sense. We also, of course, try to bring interesting people on the board so that we can really drive growth and open some doors or get the company going in new markets. It's a lot around structure. We also providing some sales trainings for their salespeople. And so we gather people from all our companies to do some sales trainings. Many companies have been doing this in a really good way, but we, again, we try to make them great and improve a little bit more in all dimensions. And that pays off.

There's some templates you can apply across, like the reporting and really understanding these metrics. And then you may find some resources. Here's a sales consulting group that had a big win and we can introduce that across some of these other companies as well. How do you sell this concept when you go to a company and you're looking to acquire them? I'm sure these days it's easy to make— when you decide to sell, to make it competitive. First of all, if you look at your deals, you've done about 85 deals. When you look at deals you've done as proprietary deals versus deals that were through a broker or some kind of auction process, what does that split look like and has that sort of evolved over time?

You need to sort of elaborate a little bit on that and put some nuances to that discussion. What we're doing is that we build an internal database of all the companies that we find interesting. And in the markets we've, where we've been for a long time, like in the Nordics or bigger parts of Northern Europe, We're getting known along the way because we use those ideas to get out and talk to people. And that is outbound. That is where we search for companies, find companies, meet with companies. And sometimes we say that we drink a lot of coffee here. So we're out there drinking coffee with people, having a coffee here and there and meeting with people. But then most times when we go out there, the companies that we approach are not for sale. They are not in the sales phase at all. They might imagine selling the company in 10 years or 5 years or whatever, but eventually they get to a point where they would like to see what the market value of the company is or where they should go. And what they do then is usually they contact some type of an advisor, some type of broker, someone that helps them with— this is the first time they're doing this. So normally they have someone. The first thing the broker does is to make a list of potential buyers of the companies, and then they highlight us that we've had good discussions with LogiCrown for many years. They could be a potential buyer for this, but they still don't want to go direct with us. They still want some type of competitiveness into the process. 70% or so of the companies that we meet have some type of advisor at their side.

Okay.

But it's not purely competitive all the way through. And it's not like, uh, for bigger companies, you're looking at a more of an auction type process that the auction is carrying on all the way to someone signs the deal. With these small, because that's also important to understand, we are looking at fairly small companies and that means that everyone cannot spend that type of amount of money and time looking at an auction like this. And what happens is that we would like to be exclusive much earlier. We would like to be sure, okay, we like each other, we like the price we're discussing, both of us. So let's try to get somewhere. And if we don't get through, then they can go out to sell the company to someone else at a later stage. But let's spend 6 weeks or 2 months or so together to make sure to see whether we can find one another all the way through the process. And that's how we round the M&A.

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How do you maintain your pricing discipline? I know you've mentioned this sort of 4 to 8x range on EBITDA. We've seen market fluctuate coming out of COVID We saw things inflate pretty dramatically. Private equity world's hypercompetitive. I feel like there's an endless supply of money chasing deals that tend to inflate the valuation up. How do you hit top all that?

In the market where we are doing this, prices have been fairly stable over a long period of time. And I also, I don't know, people might think it's wrong to also be transparent around what we offer, but I think it's actually a good thing because in order to make this model work, you need to be disciplined. If price gets carried away, then it makes the whole thing much more difficult. For us, it's been very important that we can actually finance the whole flywheel ourselves, that we get this going, that we generate our own cash in order to buy the businesses. We have not done any capital raisings over the years. We have founded this whole thing with just internally generated money.

Buying businesses that make money and then using a portion of the money you're making to continue buying those businesses.

And when you look at new companies in this market, You'd rarely see that. Most companies that are new need to sort of build a capital base and start going, and then you need to turn the flywheel around that you're actually generating enough from the existing business that you can grow to the level you would like to. That is a bit of a transition when you're building this model that we did many years ago. All the way through my tenure, we have been founding our own acquisitions.

You convince people to sell their business?

Yeah. Yeah, I think so.

How do you do that?

We have a quite interesting value proposition to sellers. If it is a high-growth, early-stage, more of a venture-type thing, then we are usually not the ones buying the company. Those companies we don't look at because the multiples and the price tags of those are just so much higher than their performance currently. So it, it's not really for us. If we're looking at other companies that if you wanna sell to a trade buyer, you might get a good price for your company. But then you don't know where your life's work will end up. We have a value proposition of putting your life's work in good hands because we would like to work with it. We would like to keep the brand name. We would like to meet the sellers at the grocery store, the local grocery store, some 15 years after we've done the deal and the company is still around and we can look one another in the eye and say, this was a good thing for the company. It was a good thing for them. It was a good thing for us. That works all the way through.

Preserving legacy.

Yes.

I'm going to try to role play this out. Like if I'm somebody that has a business you want to buy, I got private equity maybe offering me 2 turns more than what you're offering. And then they have that, the bite of a second apple concept. Oh, we're going to buy this. And then maybe they roll over equity into this other company, pitch me some synergies. We'll sell that business 5 years from now, and then you'll get another check that's even bigger. How do you sell against that?

It is about making sure that they understand that we will keep the company and delivering on that promise. Because people, you might get a couple of more points if you sell to private equity. Yes, you would, but you have no idea where your life's work will end up. You inherited this company from your granddad or someone and the previous sort of generations, and to put that in someone's hands that is actually going to change the company or make everyone redundant or just move the company to a low-cost country or whatever. People don't like that. People don't want that. It is a price tag attached to that. We actually keep the company as it is. If you're building something, it goes for, for me, it goes for everyone. I would like the company to last much longer after I'm gone.

I agree. I'm wondering too, if that's cultural, if you do see that by regions or countries and also by generation, because I feel like I'm part of the emerging, because the last business I founder of was a tech company.

Yeah.

And I feel like you're just operating an ecosystem where you hope one of the big fi-tech companies comes by you and integrates you and you're done. You get a big check.

You're in finance, I hear.

Right. Exactly.

Yeah.

And then that's why I'm wondering where maybe these are more of these established generational businesses. And is that more predominant to countries with older history, like in Europe?

Yeah, maybe. We have had great success also in other countries. We see that happening in the UK, or happening in Germany and in the Netherlands. We've not been that present in the US. Maybe it's a bit different there. I don't know. Yeah, there might be some slight differences. I agree to that, but I'm not sure it's fundamentally different. People that put a lot of pride into what they've built and that they feel that my legacy should outlive— I don't— I have enough money to do whatever I want in life. So do I want 20% extra just to to maximize, or do I leave that money and make sure that the company— I have my family within the company, have my siblings, I have people working for me, I have people that have been working for my company for many years. And if I sell to someone that is going to change the company, they might be out of a job in just 6 months. Do I want to put them in that spot or do I want them to feel that, okay, I made a good choice here and I kept the company as it is?

Or $10 million.

Yeah, that's the thing.

That's not a small amount of money. That's actually quite a bit of money.

Yeah, it is. If you have $100 million before that, or you have $200 million before that, it doesn't make a difference.

Okay, so that's a fair point. So this is the biggest driver is here's your organization, you have a track record of the businesses you bought, have you preserved them, you operate them with local management, you essentially preserve legacy, when you have a reputation built around it, that's the big suit that you have and they get to know you. Obviously, a huge part of M&A that gets underestimated by people new in the industry is so much relationship. That's why you're having all the coffee. Yeah. So you're checking in time with people. Is there anything that you do to manage that relationship in terms of keeping in touch? Like if you have a business you're really interested in?

Yeah.

What's your average you think it takes from the first conversation to the deal becomes actionable on average? What do you think that is across the 85 deals you've done?

You have a skewed sort of, uh, some of the best deals we've been waiting for 10 years.

Yeah.

So it might take that long, but most times it's, we don't get in contact, maybe 2, 3 years, maybe the average.

Average 2, 3 years. Okay. So it's still up there.

Yeah.

Is there like an approach to maintain that relationship in that period of time?

Yeah. We collect their annual reports. That is another thing with the Nordics. It's quite transparent. So you can find financial figures on most companies. And that means that we get a reminder of the company once they put in their most recent numbers. and that means that we, we get a reminder and we can follow up on that and maybe give them a call. Oh, you had a really great and successful year last year. Okay. What is happening? And then how do you see things now? Can we come around for another coffee or sort of, yeah, can we meet again? It's constantly working with those type of things.

You get some indicator with these public financials. I know that's big in Sweden. Is it just across the Nordics? Like all these countries have their financials public?

Yeah, most of them do, but to different degrees. It's Sweden and Finland and to some extent Norway that has most transparency. Denmark is a little bit less transparent.

And then there's other parts of Europe that probably isn't as transparent.

That varies quite a lot. So in Germany and usually it comes with size. So the really small companies don't need to be that transparent while bigger companies need to be more transparent.

Yeah, that makes it really interesting because now you have these indicators. If you can see how a business is performing.

Yeah.

Going back to that point of making the deal actionable, because you sold them on your model and obviously they respect it because they keep talking to you. But is there a point in time or is it more of, hey, I just want to be the first person you think of when you're really committed to sell? Or is there a little bit of a nudge?

It depends. There are sort of more of external factors that matter. So if there is a war starting in the world, maybe it's a good point to sell before. Things get really nasty. Or you might think, okay, now we're in the low period, or so I'm probably going to continue for another few years before I sell my company. So there's a bit of timing discussions going on on the sell side usually. But most times it's reflected from how things are with the family. Are the main people sort of healthy and up and running, or are they more running into problems? Are they getting along within the family? Or all kinds of things or aspects that come affects when it's actually coming out. For sale. If we are close to that situation, maybe we can encourage them and see, okay, maybe we should do something now. It is a good time. Then we can maybe affect the timing a little bit, but not to a great extent.

No, no high-pressure tactics here.

No, they should be ready.

Essentially, you're trying to find out like what that timeline looks like.

Yes.

You're checking in with them. Things are good. Hey, are you still, you know, you're thinking about an exit timeline?

It depends on what type of relationship you're building. I don't think they tell everyone in the local community how they think about these things, but they might do to someone like us. We came across a company that said, we're going to get to $100 million before we sell the company. It is a timing thing, and they have all kinds of reasons that they are thinking of it or not. But usually it's around the succession. So if the senior people are approaching their 70s or somewhere there, they are considering, oh, what to do in the next phase, and I can't carry on for much longer, and my sons and daughters are all over the world doing other stuff, and then it's maybe time to think about it. They end up selling the company.

Can you teach me how to structure these deals, negotiate? You mentioned doing the earnouts, which I like because you keep an incentive to make sure there's some principal that's proactively keeping the business going. What else do you do?

I think there are a couple of things that is worth highlighting. First of all, we think of ourselves as industrialists, and that means that we are not purely financial. Some of us have been doing quite a lot of that, but most of our people have not. So we need, uh, and one core value that we have within the group is really simplicity. So we need to also do valuations in a very simple way. When you get into too much of sort of future cash flows and discounting, that type of thing, arriving at a net present value and calculating IRR and all those type of things, you're losing all the industrialists in that process. You need to be simple around it. And therefore we have always looked at sort of our old metrics that was put together, our or philosophies and profitable working capital and growth of 15% and those type of things, they were established already in the 1980s. They've been with us for so many years. So we try to keep it simple and we also try to run things much more with sort of multiple type thinking in terms of EBITDA multiples. And we try to establish those on what we think is really a sustainable level of earnings. So we usually try to establish an EBITDA level that we think is sustainable and then we apply multiple to that is the 4 to 8 times. And then the earnout comes in when the company is performing better than the sustainable earnings. We try to split profits above the threshold in between sellers and buyers and do that for the coming 3 years. In the US, we love our adjusted EBITDAs and, uh, we don't like adjusted here at all. We do hard numbers.

I was asking if you have your financials reported out publicly, even as a private business.

Yeah.

How accurate is that? Because I mean, is there still like funny business?

Yeah, we need to look into that and get the financials and, and have a discussion on what's extraordinary here and what are the adjustments that we need to do. And the quality of earnings is of course a very sort of important analysis that we do before. Usually they provide us with some numbers and then we need to say that those are correct. But there might be some adjustments to that. That's true.

Do you try to do all that before LOI or do you put an LOI with a contingency that you want to—

Both ways actually depends on how it works, but It is always so that if they are providing us with skewed numbers or something, then we need to adjust for that later on. Then we end up in a difficult discussion after signing the LOI.

Do a price adjustment.

Yeah, for a fair reason. I mean, if they have been transparent and they have given us good numbers, then we don't adjust the price.

The operating model, it'd be interesting to talk a little bit more because you did talk about the operating model and that you operate these businesses independently, So essentially you have 85 CEOs.

Yeah.

Okay. So let's talk about this, the business and the how you operate managing 85 CEOs. Is there anything you centralize? Do you have any like centralized functions? I always find that fascinating. I'm used to like traditional consolidation.

It is very, it is very light touch. So it, it is very decentralized. I like to think of it that we centralize basically 3 things. We centralize the banking. Centralized. We centralized the insurance side of things and we centralized the auditing.

Auditing.

Yeah.

That's it.

That's it.

Not the HR, not the—

we try to share ideas, we try to share sort of experiences, but it's not centralized. It's like running a team of people that are individuals and they want the right to run their, their, their things, but they find improvement opportunities by talking to one another as well. Find them themselves. And if they run into problems with their ERP system and they're up for finding a new ERP system for their company, they usually talk to their colleagues in other of our companies to find out, but what are you running? What was good and bad with that? And sort of try to share ideas.

Is there anything you do to make that easier? Once CEOs think about ERP?

Yeah, we have some groups online, but the most important thing is that we gather all our MDs or the CEOs of the companies. Once a year on an MD conference that we run every year. And it takes a while, but people are usually with us for many years. So you might feel like a newcomer the first time you're there, but once you've been there 2 or 3 times, you actually have a few friends there and you can basically visit them anytime you like. If you have some commonalities, you can pick up the phone and talk to one another and discuss whatever matter you have on dealing with.

So you have this extended network of leaders. Yeah. You get them together, get them to know each other, build relationships. That helps them facilitate opportunities to look at their business, share ideas, improve. What about your core team? That is the core Lagerkrantz Group that manages the acquisitions and the centralized components. How big is that team? What does that look like?

We have organized our 85 business units or approaching 90 now, but almost there. We have organized them into the 5 divisions and each of the divisions used to be 1 or 2 persons per division. Now we're up to 3 persons per division. There's actually 15 people running the 5 divisions. Their most important part is to chair and be board members of the different subsidiary boards.

Oh, interesting.

But they also are running M&A, so they're also looking for M&A opportunities within their sector.

What are their backgrounds? Are these like senior operators?

Yeah, most of them are senior operators. They might have an M&A or more of a financial background, so they're good at M&A, but they also might be analysts or they might be former management consultants. and we try to bring together a group of people that can do a lot of things. So we can't find all those profiles in one person. You need to find a combination of persons that gives you that total profile within those—

So this is your, this is your force multiplier. These are folks that represent the company, that are having the M&A conversations on the business development side. They're sitting on the boards of a lot of these existing businesses. So they're in the industry and looking around, seeing what else is there, going to the conferences, having a lot of coffee.

And they also go out with their companies to different customers, but they also go to fairs if they're out doing sort of, yeah, representation at fairs and stuff. There is a safety and security fair in Stockholm at the moment, and I have a couple of people out there to meet with the people that are, yeah, present in those places and make sure that we are well known and that they see that we have companies there. And also, if they have thoughts around their own company, they might come up to us and we have a discussion.

Anybody else besides the 15?

My deputy is heading M&A, so he's running the sort of M&A process. He's a bit of a dispatcher for the M&A processes and working with those, following up on the business M&A processes.

Like your head of corp dev, basically.

Or yeah, head of M&A is his role. And we think about it like we should acquire 10% of ourselves every year. And that means currently with the size we have, we need to do around 8 to 12 deals per year. Basically one a month is what we need to do. And you break down into the 5 divisions, it's actually 1 or 2 or 3 deals per division per year. And they have that responsibility to run their businesses. They have around 18 to 20 or some, somewhere there companies per division. They should also conduct 1 or 2 deals or 2 to 3 deals per year.

That's where we'll pause the conversation for now. Jorgen just gave you 20 years of acquisition discipline under an hour. The real question is how much of it your team can execute when it counts. The M&A competency assessment tells you pricing discipline, deal structure, governance. Take it yourself or run it across your team before the next deal. MAscience.com. And don't forget, part 2 drops next Thursday. That's where Jorgen gets into the operating culture behind 85 autonomous companies. Why the Nordic model works when global attempts fail, and what he'd do differently starting from scratch today. Worth a listen. Thank you for taking the time to explore the world of M&A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M&A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email, Kison, K-I-S-O-N, @mascience.com, or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com. Here's to the deal. Views and opinions expressed on M&A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.