Storskogen vs. Mittelstand “succession crisis”

The aggressive serial acquirer Storskogen ("The Great Forest" in Swedish) signed an agreement late last year to acquire the Swiss machine-tool peripherals firm LNS Holding SA for c. 9.7x LTM EBITA (11.4% EBITA margin), assuming full earn-outs.

It is their largest firm acquisition yet, with an EV of CHF 200m. And they have acquired ten firms YTD.

CEO Daniel Kaplan intends to keep up the EBITA growth he has sustained during the last couple of years, which is c. 70% annually. Their organic growth target of GDP +1% to 2% gives us a clue on their ambitious M&A plans.

Storskogen's M&A team has scaled to c. 100 people spread over seven groups in Sweden, Denmark, Norway, the UK, Germany, and Switzerland; they will also expand into Asia and the US.

Storskogen invests in its M&A teams to keep accumulating small targets, similar to the decentralised strategy of Constellation Software ("CSI"). And when Storskogen establishes themselves in new geographies, they are willing to make more significant acquisitions (just like CSI).

CEO Daniel Kaplan sees only limited valuation inflation for targets. They can acquire targets at lower valuations than PEs and strategics as Storskogen are open to fulfilling non-financial seller considerations.

They are perpetual owners and do not merge targets (save for bolt-ons), alter brands, or move operations from smaller cities where some targets are essential civic institutions.

While the perpetual owner model of accumulating SMEs is popular in Sweden, the long-term focus remains rare internationally.

Reach out to Storskogen here if you want to engage in an unconditional discussion regarding succession planning for your firm.

‍

‍

‍

Disclaimer: This is not investment advice. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. Any reference to or omission of any reference to any company should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. The author may hold positions in securities discussed. Any forward looking-statement is subject to risks and uncertainties. Read further disclosure in the Terms of Service.