00:00:12:41 - 00:00:40:05
Unknown
welcome to the amazing weekly podcast of your acquisition entrepreneurs. How co Builders in Europe, the UK and Beyond Today, I am delighted to be joined by Ahmet Rea, who is CEO, one of the founders of Astra Holdings, a UK based private holding company. We also have Michaela and Andrea, who are from Kelly is a CEO and Andrea is the business development director from Limburg S.p.a, a publicly listed company on the AGM in Milan.

00:00:40:09 - 00:01:04:47
Unknown
Gentlemen, shall we start with our conversation about the differences between public and private activities in building a whole culture with a little bit of an introduction about yourselves permits you? Yeah, I can go first. Unfortunately or fortunately, we are not public yet. We are pretty young company. We started about a year ago. So what is Astra as well is a serial acquirer of profitable industrial British companies.

00:01:05:01 - 00:01:26:05
Unknown
We started a year ago of your Baa2 businesses. We are at about 50 people, I would say 14 million revenue in last two years. Our aim is to buy another 30 or 40 businesses over the next 6 to 7 years. But we want to run them in a decentralized manner. So we look up to the Nordics and the Nordics here to acquire model and want to keep the model closer to that.

00:01:26:09 - 00:01:55:09
Unknown
Now. Fabulous. Thank you of it. Okay, I thank you. I am Mikael. I am the co-founder and CEO of Limburg S.p.a in Italy. We found the company in 2006, so next year we have 20, 20, 20. We are 20 years older and we make a psychologist. Six businesses since 2006 a waste management, and since two years we start to be serial acquire.

00:01:55:09 - 00:02:29:10
Unknown
In fact, the sector in Italy and since two years. So we we bought around 11 Italian company and the total turnover of the group this year I think it's silky 52 million with four or 5 million of a, B D and we go to the company in 2021 or so. We are at 3000 and I've caught the in in the stock exchange in and in Milan so in the in one Minas the 20 or so Isa indeed.

00:02:29:10 - 00:02:52:15
Unknown
And yes we'll try and get a bit deeper into that in a moment. Andrea. Anything to add on that front. No, I only think as we in working with matrices with basin and they saw my hypothesis say the working experience. So it's it's a good journey so we have a good started to that to our right Uber Yeah absolutely.

00:02:52:19 - 00:03:18:25
Unknown
Michael do you have a mike. Yes. Good. Okay so I'll start with a question about velocity. How does one manage to do multiple acquisitions in a short space of time with a small team to execute that M&A? you guys have managed to do 11 deals in 18 months. I mean, you did two deal doing very quick succession there, I think within six subsequent quarters.

00:03:18:25 - 00:03:49:41
Unknown
Yeah. Which was incredible. What's the secret to that kind of success? Who would like to go first? Not so secret that we bought as small company. Okay, there's more or less is for 500,000. Know they're the biggest is 4 million to no avail. And we know very well we have the capability inside the company to do read the balance sheet the to speak about dumbbells so to speak about people.

00:03:49:48 - 00:04:18:47
Unknown
And we have some consultants that that he walk with us about numbers and we they help us to to to do the the deal so the company that we acquire are basically are very very simple they have to know about a major block. Okay. We are very, very they have to call. Okay. We know the market and they have to know about it.

00:04:18:47 - 00:04:45:16
Unknown
And two or three big amount of cost, this label cost is purpose cost. And we know very well where we have to see inside the balance sheet. And we speak directly with the seller. This is the point. So we prefer to speak directly with the seller. Do you mean our on, on the brokered deals then. Yeah. Due to being built deals that are not sourced through a broker.

00:04:45:20 - 00:05:11:25
Unknown
Through an intermediary. No, no, no, no. We, we speak always with the, with the seller because usually the seller stay in the company with the for one year or two we. Okay. And this is, this is the point. So we have to find the right solution not only to close the deal but to find a solution for the after the deal just to manage the company.

00:05:11:26 - 00:05:36:18
Unknown
How we can the transition time, the implementation of our project. So is not only a financial deal but is an operational. The transition will be absolutely a deal. I'd like to get into the deal structure that enables that in a little while and so we'll put a pin in that and come back to how you keep those sellers involved as operators to help that process of a smooth transition and integration.

00:05:36:22 - 00:06:03:22
Unknown
Amidst your quick deals in succession very small nuclear team at the pulled these off. How is it done here and what were the challenges in doing so? Yeah so we're trying to build a serial acquirer engine that can get to the point where we can acquire 6 to 8 companies every year. So what we are doing is we're looking at it almost like a manufacturing plant and saying what are the bottlenecks in the process and how can we make this a repeatable process?

00:06:03:26 - 00:06:19:21
Unknown
It's still early days, so we're still learning and the bottleneck sort of moves from places to places. I would say the first part is still the most up in the air process, which is origination. You know, we are talking to tons of brokers, we are looking at lots of platforms. We're looking at both on market and off materials.

00:06:19:33 - 00:06:35:00
Unknown
So at that point it's really about growing the funnel as much as possible. It still feels a bit more like an art than science. You know, things, interesting things pop out of it. If I had to say, What is the secret to success in that first bid for now, I would say luck. Hey, there is no more than that.

00:06:35:07 - 00:06:59:09
Unknown
Which of course is not a repeatable thing. But we want to get to the point that it's repeatable. Next is really around the due diligence and closure of the company there. We have built a fantastic set of partners. You know, we do commercial due diligence ourselves, but me and my founder, we have co-founder have consulting background, so we are very comfortable in doing CDs, but for FTD and already we have found amazing partners and that really gives us the scale.

00:06:59:19 - 00:07:20:10
Unknown
And these lawyers can also help us close the deal. I think the other variability for us still comes in the very end venue closing because we fund our deals with a combination of equity and debt. Thankfully, equity we have at a holdco level so we can deploy it without having to go back to our board. I mean, we do go back to our board, but we at these don't have to go back to our investors to seek permission.

00:07:20:21 - 00:07:58:24
Unknown
So that process is really quick. The debt bit is still not that great because we are raising debt on a deal by deal basis, right? So I think that's our whole process. There's still a bit of places where we can become much faster in increasing the velocity. And I'm interested from both of you as to whether velocity is aided through integration or separation, whether buying them and keeping them carrying on, doing their own thing until you fully understand them and can make some changes is a is a great idea that helps successive deals to happen faster when you're not in the weeds with a particular business or whether actually getting through the pain barrier, ripping

00:07:58:24 - 00:08:27:22
Unknown
the plaster off and ripping off the Band-Aid and and going through that transition quickly is is more recommended. Would you like to to explain a bit about your post deal integration or separation activity? Our permitting integration is not so easy because, as Nicola stated, the our aim is to implement our industrial platform. So basically to to do what we already do with our customer in the network management business.

00:08:27:22 - 00:08:58:23
Unknown
Geordie. So basically implementing services and processes to increase the productivity and the profitability of those company. So we ask the company required not to change but to avoid. And sometimes changes may scare people in so their desire for the first time we are meeting all the companies required next Monday, 120 people. We are putting them in a single room saying, okay, guys who want to go there, we want to develop our logistics model.

00:08:58:27 - 00:09:23:09
Unknown
We want to close the peripheral. What I was we want to apply our logistics distribution model. We want to develop B2B rather than be to say we want to bring as a group corporate customer and we need your app. So we don't want to to change your local routes because you have the contact with the final customer. So this is important that I think that must be kept.

00:09:23:13 - 00:09:53:18
Unknown
But on the other end with our because we are not attract people, we are not technical people in this in this industry, but we saw a huge field service companies doing many improvements in their in their processes. So we know exactly what needs to be done in the next four years. But he has to to become the first major player in installation and maintenance of the office park.

00:09:53:22 - 00:10:21:19
Unknown
Of course, this is not that being the the velocity of the integration. As soon as we don't have committed people and a sort of integration team is like the role and it's something that we are starting to build in this, in this way. It's a moment of maturity though, for an acquisitive company is where you actually end up not just with the corp dev team but with a post deal integration there.

00:10:21:23 - 00:10:42:31
Unknown
That's, you know, it's a luxury to have at the beginning because these are overheads that you can't necessarily carry, You can't support these costs but actually becomes a necessity once you've got to a velocity area. Ahmet could you speak to your plans. Yeah. So we talked about how to increase velocity in post-merger integration and our answer was don't do it.

00:10:42:35 - 00:11:00:00
Unknown
So it's sort of a conscious decision. With serial acquirers, you can go the decentralized out or you can go the role up out, which is what you guys are doing. We decided not to go down that route and sort of stick with the decentralized model, which is again, what Nordics over the Nordics needed acquirers do. Are people a constellation do?

00:11:00:04 - 00:11:22:09
Unknown
That said, we do try and align on the financial side. That's one thing that we push very hard is to make sure that there is consistent reporting, there's consistent way of reporting KPIs, and there's a cadence that tends to be, or at least it now has tended to be a relatively easy task to do because during the BD process itself, you're able to establish those KPIs and sort of rolling them out.

00:11:22:18 - 00:11:43:18
Unknown
Post-acquisition has been easy. So for now we're not worrying too much about it. The other thing that we are beginning to see, of course, is given we have acquired two companies, we are finding lots of interesting companies in those spaces that should improve our deep space and so we should be able to close deals much faster. But post closure, we don't intend to integrate this company.

00:11:43:18 - 00:11:57:02
Unknown
Okay. So even if they're in the same space, you just buy not even as a tuck into a platform, you would just buy them and have more. We might we might do a few bolt on. But I think this is where you have to be almost careful from day one and choose a lane and stick to the lane like one.

00:11:57:02 - 00:12:18:05
Unknown
One of our value propositions to a seller is to say, We will leave you alone, right? We will not try and like change the ways of working. You know, it's all about legacy, it's all about longevity. And we have found in few cases where we have started discussing even bolt on acquisitions, you're basically going back on your intended promise and you can't have an inconsistent model.

00:12:18:05 - 00:12:31:15
Unknown
So we're still trying to figure it out. What we might end up doing is buying to companies who are in the same space but are not competing head on so they can learn from each other and they can collaborate. But, you know, we don't want to get into a point where they're competing head on because that's when you would need to bring them together.

00:12:31:26 - 00:12:57:11
Unknown
And that's not what we'll what we want to do. Well, the Nordics do very well is that autonomy, that that independent operation of the businesses, but with some shared processes and shared learning things, but also kind of they call it clustering, putting these businesses together into a managed cluster where they can learn from each other, collaborate with each other, but they're not changing anything that's going to potentially be to the detriment of the customer by trying to shoehorn one business into the other.

00:12:57:11 - 00:13:20:07
Unknown
So it's really inspired way of doing the post merger kind of value creation rather than value destruction, which can often come when we try and put smash companies into what? Let's talk about the capital structuring the deal. So we'll talk in a minute about capital coming in because you mentioned about having equity finance, which is great. And obviously you guys are tapping the capital markets for your acquisition capital.

00:13:20:07 - 00:13:46:46
Unknown
But on the deal structuring side, you touched earlier, Michaela, about needing your sellers to stick around for a while. How does that what kind of shape do your acquisitions take in terms of rollover equity or, you know, options in the holdco or deferred consideration earn outs, conditionality? What do you do to keep those sellers focused and keep them involved for the moment?

00:13:47:00 - 00:14:12:10
Unknown
For two or three in Italy, we have a more settled than buyer. So I think that we are the first in Italy that we move in this settle so we can contract with the seller with the condition, and they usually accept that the postponement of payment, usually we pay 50% of the total price of the going and then there are two or three years of postponement, but not all now too.

00:14:12:11 - 00:14:38:14
Unknown
For the moment is not. No, just and also. No, I don't don't know without without conditions. And we got a guarantee of the number. You okay on the payment and usually they we ask that they stay inside the company at least the six months or one else. Okay. Okay this is the end. Usually we find the inside the company cash and and usually that company, they don't have that inside.

00:14:38:18 - 00:14:55:26
Unknown
So we are thinking about the to use a much more the financial leverage to just to to put the debt inside the company that we bought that that we buy and you get at least a cash on closing that's on the balance sheet to the sellers if you're Yeah. Do they take some of the surplus cash with them.

00:14:55:30 - 00:15:42:35
Unknown
Yes. Okay. But they're incentivized to stick around for a period because half of the consideration is over three years. Yes. But is and we we contact with the with the seller just the period of 4 to 12 hours to implement it and to find the new people and new person that take the management of the company. So we don't need the as a know now to incentivize the seller to stay and to reach their results at the end of two or three years is not is not at the moment all the dealer that that we made the don't is not all not good very fair and you don't get any resistance to 50% deferred consideration.

00:15:42:37 - 00:16:00:44
Unknown
I was about to say that 50% even payment in. I want to switch seats with you. Yeah exactly. I take it you're not then achieving such lofty heights of office? No, it's an interesting conversation we always have. So a like, you know, the sort of deals we are doing. We want the management team to stay back. The management team may or may not be the same a seller.

00:16:01:06 - 00:16:17:04
Unknown
So if it's a 70 year old or selling, but there's some other management team of staying back, that's already fine. Almost every conversation goes like this. We think this company is just about to take off, is going to do amazingly well next year or the year after, the year after year after year and tomorrow. Yeah, it's just like it's just going to be brilliant.

00:16:17:04 - 00:16:34:20
Unknown
You're going to be so lucky. Is it? Okay, you know what? As a result, we're willing to pay you more. But why don't we structure some of the payments linked to those amazing performance that is going to hit next year? And then everybody says no, no, I have 100% of cash today. Right. And then you start negotiating from that point onwards.

00:16:34:24 - 00:16:55:09
Unknown
There's nothing typical. But typically, I would say our deal is 20% seller deferred, 40% equity, 40% debt with seller deferred. We also don't do any sort of earnout. It's a fixed amount as long as the revenue is within a band, we will pay that out, but that money will definitely go back to that. Right. Well, that's that's very refreshing to hear those deal structures.

00:16:55:09 - 00:17:36:29
Unknown
Gentlemen, thank you for the for sharing that. And so on the capital coming into the acquisitions, then you're having to raise in order to execute these. Could you speak to how being a public company has made that possible or make that easier or made that more difficult? I think easier. I think easier because when we start, we raise around 4 million, 3.5, 4 million, okay, in the 21 and at the end of the year, we have again 2.7 million at the end of last year because we have the warrant and or the warrant or well executed.

00:17:36:34 - 00:18:07:18
Unknown
So we gain and I think this is a big opportunity to raise capital and many, many funds the new OSR. So I think that for now is a is a big opportunity. We use only in the IPO in two years in the IPO A for war and then one placement. Yes, Yes. Okay. So that's great. And what does that bring by way of obligation on you, like in raising that money publicly beyond the reporting requirements?

00:18:07:18 - 00:18:35:05
Unknown
Yeah. What's because the wheel has to keep turning right. So what we see about the Nordic acquirers is they're almost obligated every year to do more deals. Otherwise you see it damage the price to earnings ratio or the market cap kind of suffers a bit as a consequence. So I wonder if are you under now this kind of like, you know, treadmill, if you will, of must keep acquiring in order to keep the public market satisfied?

00:18:35:09 - 00:19:01:28
Unknown
Yes. But is not for public market. This is for us that we that we make our business. So I think that if we are able to to speak with the investor or the public investor, not only the big phones, but the right to order or the or the smaller family office that you have inside our investor base. I think that and they agree with our strategy.

00:19:01:32 - 00:19:26:40
Unknown
I think that the interest of the shareholders is the same interest that we have. Yeah, we are shareholders. So I think that we are very, very clear in our in our communication to to the market. The I put inside the financial statement all the information that they see need the to the investor to, to choose or not to stay in the company or invest more or to invest in the company.

00:19:26:40 - 00:20:05:45
Unknown
No problem because okay we have the strategy, okay, you are an investor or if you want to and share this thought that you can invest. But if you don't want to know Paul, then I can I can go through all their investor or so is very important for me to be public and to speak a lot with the investor and to be very, very, very clear in the in the in the in the representation of the company, it's obviously serving you well, though, because 26%, you know, EBIT growth in this in the last period and 19% revenue growth I think as is that we have reported in 24 and that's you know I'm sure your

00:20:05:45 - 00:20:49:41
Unknown
investors are very happy with the outcome. Yes. About the yes, sir. We start the in in the IPO in 2021 that we may we made the 9 million and this year I think more than 50 million so the market is up with the market cap is 3036 55 for fund. Yes and and for us is I repeat that for us is a sort of gasoline and algae so we want to do but not not just to do but is is our life so and for us is very important to find the right motivation to do our job.

00:20:50:01 - 00:21:12:49
Unknown
We can make a mistake. We can go, we can we can do better. But this very important, our motivation at which point is becomes self-sustaining. You've done to place IPO and a placement for the warrant. At which point do you find that the cash that's just generated by the business units is enough to fund the next acquisition and keep that cadence going?

00:21:13:00 - 00:21:42:30
Unknown
Yes, this is the goal. This is the goal to find the right the strategy to self-financing the growth without any additional capital. Are you under pressure to achieve that goal by any particular year or the overtake? I think two or three years, Right. Okay. So I'm it by contrast, raising money as a private company. Yeah. Particularly beginning of the journey with a with a pitch.

00:21:42:34 - 00:22:02:48
Unknown
Yes. I look I mean the end goal, the nirvana for a serial acquirer is hitting that inflection point where the flywheel effect kicks in. You never need to raise any more money and life. The compounding engine takes over and just money falls from the roof. And that's where we all trying to get. The question is how long does it take?

00:22:03:08 - 00:22:20:35
Unknown
But also what does the size of the engine you're trying to build? So we are at tons of conversation right where people want you to actually the early stage investors want you to build a small engine. You know, we've had cases where people said, just go buy one company or two company late for seven years, then buy another to wait for another seven years and your grandchildren will be really rich.

00:22:20:39 - 00:22:48:34
Unknown
Right now. So that is one thing you have to decide is what does the size of the engine, how fast you want to get to and you know, where will you get capital from? Private money is painful. You know, what I've heard is and then you guys are the experts. And there's in some way, if you can get public money, it is a lower cost of capital, but it does come with all kinds of of reporting ishow is the other thing which we also struggle with a little bit is this is essentially a long term hold model.

00:22:48:38 - 00:23:05:30
Unknown
And when you contrast that with public equities as they tend to look at this thing on a quarterly basis and then that creates a lot of pressure for these companies are doing long term hold to sort of try and take actions that are more short term in nature. Right. And we were in Stockholm. I know you guys were there as well.

00:23:05:40 - 00:23:22:22
Unknown
And you talk a bunch of people, for example, there are Finnish serial acquirers who had had a very hard time because of their exposure to Russia. Longer term, I think they will be totally fine, but shorter term because of those things, they've taken a lot of beating. So there's still early stage At some point, you know, we will think about listing.

00:23:22:26 - 00:23:42:10
Unknown
That said, we haven't quite answered the question. Why do you need a listing? Is it to give liquidity to early stage investors? Is it to continue to raise new cash or just purely for emotional reasons? And at least I find a lot of Nordics do it just for the heck of it. I mean, if you look at Draco, which I built at about 3 billion this year, they didn't really need any cash.

00:23:42:10 - 00:24:10:22
Unknown
So any cash raised from the public equity has actually gone back to early stage investors, right? Yes, exactly. Already? Yeah. So it's like why why did you need to do an IPO? Because I think Fredrik also wants to compete with the other other serial acquirers. Yeah, that's a good enough reason. Yeah, I think I think that the secret is to find the as I thought before, the investor with the long, long patient goes Yeah yeah patient care out it the public market it podcasts.

00:24:10:23 - 00:24:30:30
Unknown
Yeah that's that's the unicorn isn't it. Yeah. Great let's talk about some of these obligations. I mean you guys index a lot on ESG on the circular economy, on, you know, energy efficiency. And obviously you're buying, you're acquiring, in fact, which, you know, we're going to need more of it, global warming, and it's going to use more energy.

00:24:30:34 - 00:24:58:29
Unknown
So what does that as a public company, what does that do for your you know, what kind of metrics are you finding You're happy to hit alongside the financial ones in an ESG context for the markets to be happy that you're a, you know, ethical investment? My knowledge is because of the some of the is not basically our aim is to bring improvements in the environmental sustainability for our customer, which is the main aim of our economy business.

00:24:58:29 - 00:25:39:21
Unknown
There. You know, so basically we put in place some specific projects above all in the luxury industry, you know, it's public. We work for our LVMH group in Italy. We are the main partner helping them in managing all the household goods and products, and they have a really huge quantities, basically helping them in that regard, not just recycling material but trying to produce recycled material, using the ways that we use to collect the oil that we're already Italy in many industry cosmetics, the leather industry, leather goods.

00:25:39:25 - 00:26:11:48
Unknown
And so, and in this case, of course logistics and waste management is just a little part. Then we have all the reporting issue that the integration we know the supply chain, the periodic reporting to the final customer. So our work in in ESG is, is made in, in this sense, of course we we are also a logistics company, so we have our own best brand in Dover, Italy, every, every night the we, we have our sustainability referred to it.

00:26:11:48 - 00:26:49:26
Unknown
It is annually. So in, in this case and as you stated, the product or switchback needs to be driven by efficiency on the in this case also in Italy where we have lots of fiscal bonuses driven by the government helping people to change old machineries in order to get the new machinery better environmentally at pharmacies. I can say that this can be also at ease because if the bottles ends, then some company may, loser.

00:26:49:30 - 00:27:08:36
Unknown
quite a lot of fraternal that in this case we don't see this kind of impact in the companies. We, we applied about the, we saw some target that's What about be impacted in any sense? Let's see, is there any such obligation on the private business? I mean, or is it a personal choice? I mean, it's a personal choice that we know.

00:27:08:36 - 00:27:43:49
Unknown
What are the kind of companies we want to buy. But outside of that, this is not something we are actively managing. That said, we sort of end up indirectly managing it because both our companies do go after large contracts with other companies and with the government, and you just have to be sensible to win those contracts and so if there is one nugget of wisdom that you'd like our assembled audience to leave with, if they're debating a path that takes them to become a public company or whether they should explore or whether what they should, what they need to navigate is a private company first with multiple acquisitions.

00:27:44:03 - 00:28:14:17
Unknown
Perhaps each of you could just spend 30 seconds imparting, you know, one nugget of wisdom that these folks might find useful. Andre, I have one. As soon as you get public talk to investor, it's it's it's your obligation. It's a job in a job. It takes effort, but it's I mean it for me, it's, it's the best part of my, of my job to try to meet the to meet the few times, many times the same people it was, they they still are.

00:28:14:21 - 00:28:43:08
Unknown
Investor Yeah. Investor relations is a full time job trying. They trust you. So, in some cases we see companies that they get public, they raise money from the IPO and then they disappear. And this are reflects also the stock price because they don't grow even if they are good companies with good astronomical, performance. So if your public start doing that so it's, you have to be a great lesson that, that's a great lesson.

00:28:43:08 - 00:29:10:25
Unknown
I'll just echo and extend. It doesn't matter whether you're public or private. Talk to your investors. Exist existing and potential. Yeah, it's a full time job for sure. Anything operationally making it from a public company perspective that people might want to be aware of or from a perspective of somebody with such a velocity of acquisitions. Is there something that perhaps if you reflect on the journey that maybe you wish you'd known at the beginning of it?

00:29:10:29 - 00:29:38:07
Unknown
No, I think I'm very happy to be public that up to be public. And I think that for us is a good way for the old shareholder or for the main shareholder inside say com this is another point for me is very important because we found the company great we at the very beginning a 5050 with my with the current president of the company and Andrea and with the minority shares.

00:29:38:07 - 00:30:01:11
Unknown
Okay and to be public each shareholder I they can do we chair what he wants before is impossible to do that because we are all in the in the in the in the same company so all we find found inside the company. But we want to maintain the full control of the company we don't want founded inside the our board.

00:30:01:15 - 00:30:24:34
Unknown
We want to decide by ourself. So he's very and the public alone to do that. Yeah so it's very important the if under our to model want to be 3% and not four can go to the market. And interesting how much is actually delegated to the board more in a public market setting as a public company, the boards get more control over running the business then often.

00:30:24:34 - 00:30:57:04
Unknown
Yes, but it's always the board that actually is nominated by us. So we are. Yes. And we are a majority in the balder we have. Okay. And so we are an independent there. We are selling people in the board about in the board. But the older is very known by buyers and them I, I, I didn't see a big difference between privat as you will learn of involving your shareholders and communicating with your shareholders and running a private company like it was a public company.

00:30:57:04 - 00:31:24:03
Unknown
I imagine so. Yeah. Great. Really useful stuff. Thank you gentlemen, very much. So we've got time for a few questions from the floor. Yes, sir. Your Hydra fat offers just is a measure that you're modeling I call the Lord Sewer Pass, but they differ quite a bit. And an acquisition is in both. Then probably set incentives because the centralization is it's a spectrum, but they do certain sentences even more as a subsidiary and so forth.

00:31:24:07 - 00:31:55:44
Unknown
And in Frederick Coulson, then you're in, they do it quite differently or extremely successful. So one question, one subquestion, what have you picked from the different Nordic models? Is there about only money you think is superior or are you picking and choosing the different ones? And the second one is, particularly in regards to you, how you said isn't subsidiaries and the operation oversight, are you do you plan to standardize this before you pick up the pace of memory?

00:31:55:44 - 00:32:24:37
Unknown
Because we see I would name a let's say, technium, because other than that, this will win rather quickly without centralizing M&A or the operation of. Well, we're just going to restate the question for the purpose of the mike, because I want to pick up that gentleman's question. But I guess it's a twofold two part question. Are you picking particular parts of Nordic models to execute your deals, incentivize your teams, etc., or are you emulating one in specifically?

00:32:24:41 - 00:32:50:03
Unknown
And then secondly, are you getting your M&A kind of process standardized before you get to know the M&A? The the population? Yeah. Yeah. So so on the first one, I wish I could replicate Draco, but I can't because I'm not Frederick Coulson. I, you know, he can go buy a 30 on connected assets in six years and list that you know 30 X multiple or whatever he has done for 3 billion.

00:32:50:12 - 00:33:18:40
Unknown
So I wish I could replicate him but I got I because prior to that he had 20 years of, you know senior leadership position and you know, I don't have that in terms of our revolving line or picking from others. I think we like the broader thesis of decentralization, right? How you actually implement is something we're learning by ourselves because, you know, UK market is very different from the Swedish market, the sort of businesses we are buying that acquired very sort of bespoke answers, right?

00:33:19:00 - 00:33:41:16
Unknown
So to that extent we are the philosophy is something they're following, but actual implementation of the philosophy is very sort of Astra specific, right bit of a really answer, but that is what it is. Then the second thing is in terms of, you know, operational controls, like we have a very clear idea of how we want these companies to run, write, you know, financial KPIs are very important.

00:33:41:16 - 00:34:03:34
Unknown
We sit down and be right after set a strategy based on the strategy. We come down with a one year plan, a three year plan, a five year plan for a one year plan. We have initiatives for initiatives. We have a reporting structure to the extent that the management team just executes on it and follows it within a band, we don't have to do too much.

00:34:03:38 - 00:34:27:18
Unknown
Of course, if they start to deviate from them, then we have to go in and sort of, you know, bring them back in line. But the whole magic of decentralized serial acquirer model is you find amazing companies and amazing people and fingers crossed you can leave them alone to do what they need to do. And so outside of finance, we don't try and tell them how to do their job, but we do put those guardrails to ensure they're tracking.

00:34:27:22 - 00:35:00:36
Unknown
Well said. Gentlemen, Have you, from that perspective, standardized procedures, both around the dealmaking and the post deal kind of operational piece, have you? You've got things as a mode, as a model now that you just keep turning out every time you do these deals. Does the the the today we we need, as I said before, to industrialize the acquisition process on one side and also the onboarding process, which in our case is the most it's the most difficult the most times that you are.

00:35:00:40 - 00:35:25:49
Unknown
Okay great. Another question. Yeah. Yeah. Thank you for the talk. As I mentioned before, I'm a shareholder. Let Bergson's. Great, great, Great to see you. Also where you follow this mantra, a little bit of this notion that you got the shells you deserve. So you do us wise of the business and I could care about next quarter. And you say that such and such short term.

00:35:26:03 - 00:36:05:46
Unknown
Yeah well some of the smaller deals you do I feel like at that that size talent becomes always more of a problem them than the capital. And how do you deal with times if normally the only said walks after six months how do you find your placement and how do you make sure it works? Well, as for incentivize and the owner, this small business owner dependent who works 80 hours and you got a replacement maybe who doesn't know so much, doesn't work as hard to make sure I still learning while talent being more important than capital in these deals of this size or those are very insightful points.

00:36:06:04 - 00:36:34:41
Unknown
Thank you for that response. But I think that in all businesses always my out of people because the company that we we bought that that we buy is a is is inside that we we've we we find people so is very important tool and to keep a connection with the people and not only with their own and with the seller but with the of the people that we find inside the company.

00:36:35:03 - 00:37:15:38
Unknown
This is the point that if we with our project give or we give the opportunities to the people, not only the seller that the sellers, the seller, but the all the people, all the technicians say all the back office people inside and we boy, we now up audit. This is the key point because we have all people, ten people, 15 people, 20 people that follow us and the build up but with us, our industrial budget the and the in two years so one year and if we didn't lose any people so is being that the our project the is very appreciate the inside and the is true that with our are positive and with our

00:37:15:43 - 00:37:35:21
Unknown
job inside the we create opportunity for all the people. This is the point a very very big involvement of the people okay we we don't want to go down and say okay from tomorrow you have to do that. You have to do that. You have to change that. That is No. Yeah. If one of the doesn't work, it doesn't work.

00:37:35:21 - 00:38:01:25
Unknown
No, it doesn't work. It's a slow it's a marathon, not a sprint. One of the things the Nordics have done very well is that talent spotting that cultivation of the top 20% and the sort of next 20% to bring through that the leadership program I mean integrate overindex when I was fabulous led the amount of career development, learning and development progression opportunities that they almost encourage every new company in the in the group to indulge.

00:38:01:29 - 00:38:26:48
Unknown
And we found the insight inside the company many, many young people very focused on the market. But before we the big sat with the big boss. Very, very and yes, this is the point but rest some old price that exactly exact your price if the first the company where the the original boss left to this year is a running plus 30% to growth.

00:38:26:49 - 00:38:50:25
Unknown
Yeah with the people and the is also good because he made the sort of operation I completed the organization of the maintenance activity and we are we will ask him to take this best practice to be extended and all the other. Yeah. And I bet the the loyalty you get from that member stuff will be quite tangible as a consequence of that trust you placed in him.

00:38:50:31 - 00:39:12:44
Unknown
Yeah. Great. Exciting. Because I have one more question. Any body with two X chromosomes do we want it. Okay, well, taking them on. And you said did you have them. yes. Okay. I just want pick up the phone. What was the position. Did which part. So take take you work. You said, well you decide what level of dysplasia.

00:39:12:44 - 00:39:38:48
Unknown
It's a situation that you will get to decide. It'll how particular decide committees of the issue that your daily value that didn't you know it you know capsules interview with who you common misconception you would assume the economies of scale are beautiful and integration is where you get the synergies and you'd cost the operation. Yeah I thought yeah yeah so we asked we get asked this question all the time.

00:39:38:48 - 00:40:04:10
Unknown
It's a question of business model and where do you want to spend your time? So if I had bought a hundred million TV business, would I leave them by themselves and go in time by the next hundred million? Probably not. I also it depends how much cash I have. But you know, if on the other hand, I want to buy, you know, 21 million EBIT companies, I cannot go into the weeds and run them for then.

00:40:04:14 - 00:40:21:03
Unknown
Right. And the question always has to be when you're going in buying these businesses and it's a bit like the same advice people give to you in a relationship. You know, when you find your better half, do you like them for who they are or who they will be once you start interfering? Right? So he he buy businesses.

00:40:21:03 - 00:40:43:22
Unknown
It will be like for who they are, you know? Yes, they can always improve. And one of the things that we do spend time on is talking to the management team to get a sense that are they're open to suggestions, but we don't want to go in there knowing nothing about the industry, nothing about the ways of working to start telling them how to run their lives.

00:40:43:26 - 00:41:09:38
Unknown
And I just don't want to do that same principle in them in network or slightly bizarrely. Basically the same approach will start to consider that we don't have any age back background. Yeah, but we can help that mean in applying new processes, helping them to develop the, the commercial parts, to bring them huge the national corporate format. But they're the subject matter Expert.

00:41:09:39 - 00:41:35:05
Unknown
Yeah, definitely. But by the way, just just to add one more thing as well, right. I mean, if you go look at business school tax, they will always say M&A destroys value 100%. Right. If you go look up age be odd. There would be articles after articles, data after data saying M&A destroys value. And it is precisely because the acquiring company tries to add value on the company by which they end up destroying value.

00:41:35:09 - 00:41:52:34
Unknown
And then as a result, the of all that exercise is you shouldn't do any right. And if you enter this world with that sort of thought process, then this is the wrong place to be. And you know, these are serial acquirers and yes, you know, Nordics are there. You know, these guys are there. There are bunches, even acquirers, who have made this model work.

00:41:52:38 - 00:42:08:25
Unknown
It's precisely because they're now there to add value, but equally, they're not to try and add value, just step back and let it run. So finding that balance is very important to find a business where value can be added without having to force the value add. Yeah, great point to end on folks. I think that was an amazing question.

00:42:08:25 - 00:42:21:11
Unknown
Thank you very much and really interesting panel discussion. Thank you to mechanical Roddy Andre out of Greenie and to it right Thank you everybody for participating Which round of applause Robert doesn't get so