We purchase profitable, well-managed companies that are able to continue business as usual and keep their name, culture and management after the acquisition. Over the years, we have developed an acquisition process for analysis, completion and implementation. This process enables a structured acquisition procedure and quality assurance for the acquisitions that are completed.
The process can be divided into the following five steps:
Indutrade strives at an early stage to engage in dialog with the owners of potentially attractive companies. By doing so, Indutrade is often a natural partner for the owners when discussing the possibility of a sale. At any given time, Indutrade is engaged in discussions with several acquisition candidates.
Potential acquisitions are evaluated on the basis of such parameters as market position, the attractiveness of the market segment, customers, competitors, the key supplier’s strategic and technical focus, repetitive elements in the product offering, financial position, history, the continued commitment of key individuals and what added value the company can generate for customers and suppliers. A thorough evaluation minimises the operational and financial risks associated with an acquisition.
The primary purpose of the negotiation phase is to ensure that:
- The acquisition can be completed at a price that generates incremental value. Indutrade conducts acquisitions using multiples, which means they contribute to the Group’s results from the very first day.
- The commitment of key individuals continues after the acquisition. Since the key individuals are often partners of the company that is acquired, an acquisition structure with contingent earn-out payments is usually applied. Key individuals are thereby provided with an incentive to continue working in the Group and to contribute to continued growth.
- Upon acquisition of trading companies, the acquisition candidate’s key suppliers must consent to the acquisition. This is essential for ensuring that existing key product agencies are not lost.
In conjunction with an acquisition, a plan is established for how the acquired company can be further developed after the acquisition is completed. The action plan is focused and primarily targets three areas:
- Customers and suppliers – broadening of the customer base and product range.
- Organisation - efficiency, with the main objective of increasing the focus on customers and sales.
- Costs, margins and capital efficiency – to boost profitability and ensure a stable financial position.
New financial targets and activity plans are adopted. The targets are adjusted to the company’s conditions.
Group management and the management of each business area engage in ongoing dialog with the company’s management. The operational management is target-oriented with focus on growth, margins and working capital management.