Teqnion AB: Questions to Daniel Zhang & Johan Steene | Value Bridge
Archieve - Everything Daniel Zhang & Johan Steene Said
Business Summary
Teqnion is a Sweden-based industrial group founded in 2006, built through acquisitions of niche technology-driven companies. The firm targets businesses with light balance sheets, high free cash flow, and durable niches, allowing it to reinvest and compound capital efficiently. By 2018, revenues reached SEK 300m with net income of SEK 28–30m, supported by a SEK 100m raise across its pre-IPO and IPO (2018–2019). The group now acquires around five companies per year, each typically generating about USD 1m in profit, with an acquisition hurdle of a five-year payback period. Acquisitions are financed roughly half with internal cash and half with bank debt, though in 2023 Teqnion raised SEK 175m to ensure flexibility and bring in long-term investors. The company maintains a decentralized model where subsidiaries operate independently while adhering to capital allocation discipline. Group-level return on invested capital consistently exceeds the 20%+ threshold, with many acquisitions delivering faster-than-expected payback.
Catalysts & Milestones
2006 - Teqnion founded, turnover SEK 30
2008 - Financial crisis forces downsizing; external investor Vixar acquires ~10% stak
2009 - Return to profitability by summer after restructurin
2017 - Board agrees to list and raise external capita
2018 - Pre-IPO private placement raises ~SEK 100m; revenues reach SEK 300m, income SEK 28–30
2019 - IPO completed on NASDAQ First Nort
2023 - Raised SEK 175m to support acquisition pipeline; reached net cash position
2024 - Announced multiple acquisitions in Sweden, UK, and Ireland; Avalara acquired in UK, boosting recurring aftermarket revenues
2025 - On track for all-time high in acquisitions, surpassing seven deals year-to-date
Investment Highlights
Group return on invested capital above 20% over time
Target payback on acquisitions within 5 years, with ~80% meeting goal
Raised SEK 175m in 2023, retaining 99.7% of proceeds
By 2018 revenues hit SEK 300m and income SEK 28–30m
Currently completing more than 7 acquisitions in 2025 alone
Future Growth Drivers
Continued acquisition pipeline of 100–200 annual contacts, targeting ~5 deals per year
Expansion focus on the UK and Scandinavia, with diversification into defense, medtech, and electrification
Integration of Avalara’s aftermarket recurring revenues and energy-efficient compressor technology
Margin uplift from newly acquired companies exceeding group average performance
Cultural alignment with entrepreneurs, attracting sellers seeking long-term continuity
Risk Factors
Roughly 1 in 5 acquisitions fail to meet 5-year payback targets
About one-third of subsidiaries currently loss-making in tough macro conditions
High Swedish private company valuations may delay acquisitions
Free cash flow conversion has weakened, with rising leverage in recent periods
Dependence on small-team acquisition scouting could strain scaling capacity
Would you like me to also create a short investor-style one-page summary version of this (stripped of narrative, just numbers + bullets) for quick reference?
Capital Allocation
05/08/2022 Why is our capital expenditure on machinery and equipment so low?
It is low because we look for companies that do not require large ongoing investments. Of course, a few of our companies have expensive machinery where reinvestment is necessary, but our strategy is to focus on businesses with light balance sheets. The plan is to maintain this approach. We prefer to use our cash flow to acquire new, attractive companies rather than put substantial capital into heavy equipment. That is where we believe our investments generate the best return.
05/08/2022 Will Technion issue shares to purchase businesses, and are earnouts paid in cash or shares?
We try to keep things simple and believe in paying in cash. All earnouts are paid in cash. When someone sells a company, often a life’s work, they carry the invisible burden of ownership. We do not think it makes sense to replace that with another burden by giving shares instead of freedom. Our experience is that when we provide cash, entrepreneurs feel liberated, regain energy, and often put renewed effort into building their business. For us, paying cash is the most straightforward and respectful way of doing business.
05/08/2022 How is the cash for acquisitions financed?
Roughly half of the acquisition cash comes from our own funds, and the other half is borrowed from banks. This blended approach allows us to preserve flexibility while continuing to pursue attractive opportunities.
21/10/2022 Will the warrant program increase as the business grows, and will dilution be offset with free cash?
The warrant program is decided by the AGM, and I expect we will keep it in line with what we have had before. It is a small incentive for some people, and we will likely continue in some form.
As for offsetting dilution with free cash flow, we are not allowed to do that on First North. That is something to look at when we move to the main market.
21/10/2022 Have we had earnouts not paid out, and what about the future?
Yes, some earnouts have not been paid. We learn as we go, and now we are better at defining thresholds for when earnouts start and end. The target is always for both parties, seller and buyer, to benefit when earnouts are paid.
Looking back, we have probably paid out around 70 percent of earnouts. We aim to improve that while avoiding excessive risk. We are careful to ensure realistic forecasts when negotiating share purchase agreements with sellers, because both sides want fair and achievable earnouts.
21/10/2022 Can you explain the increase in CapEx this quarter and Reward’s new U.S. position? How can shareholders help?
CapEx comes in lumps, depending on timing and supply chain issues. We spend as needed to support growth, and this quarter’s increase reflects that plan. Reward’s U.S. move is still very early, but Kevin and the team in Dublin see strong potential. We are looking for talent to help grow in the U.S.
For long-term shareholders, the best help is to stay engaged and share opportunities. Many of you have valuable networks. If you know great companies that might suit us, introducing those prospects is both helpful and fun for us.
13/02/2023 Why didn’t you scrap the dividend earlier?
That is a decision for the Annual Meeting. It is not something we decide independently.
13/02/2023 What is your view on paying for acquisitions with stock instead of cash?
We are completely against it. Our approach is to keep things simple. We pay cash, and if a seller later wants to buy Techneon shares, they can do so voluntarily. That is the cleanest way.
If we paid with stock when we considered it undervalued, we would be giving away value. If we did so when it seemed overvalued, sellers who became our partners could feel misled if the stock corrected sharply. Even if they were not tricked, it is not a good position. It becomes unnecessarily complex. The direct way is to raise money on the market ourselves and pay cash. Sellers can then choose to buy shares if they wish.
13/02/2023 How are conversations with subsidiaries about lending and borrowing handled?
Each fall we review budgets for all subsidiaries, including their planned investments and financing needs. If something comes up outside of the plan, we discuss it together. If it makes sense, we finance it. If it is a poor idea, we do not. We keep the process decentralized so subsidiaries feel like they are running their own companies. When we lend money, it is not free, they pay interest to reflect real costs. With the right people in place, they understand that discipline.
13/02/2023 Can we expect a 10% net profit payout under the new dividend policy?
I do not like dividends. I prefer to buy good companies and grow the group. Ultimately, the dividend decision rests with the Annual Meeting. As long as we can allocate capital effectively and drive growth, I believe we should continue doing that.
If we cannot allocate capital productively, then yes, money should be returned to shareholders. But first priority is growth through reinvestment.
13/02/2023 Why did you raise the debt target below 2.5 instead of 2, and why not lower to 1.5?
We prefer it low as well. The target is aligned with what our banks require and also consistent with peer benchmarks, so it keeps us from looking unusual in that area. In reality, we expect to remain well below that threshold.
If we ever approach it, it will only be temporarily because of a significant acquisition. And remember, reported net debt to EBITDA is based on rolling 12 months, not pro forma. So when we buy something, the debt rises immediately while earnings do not yet show up in that metric.
13/02/2023 At what price range will you buy more Techneon stock, and what is a reasonable valuation?
Privately, I am a net buyer for as long as I am at Techneon. We aim to at least double in value every five years. Over 50 years, that would mathematically be 1,000x, though that is not a forecast or guidance.
I personally buy shares monthly with my salary because I believe we will continue creating value long term. For me, all prices are just part of dollar-cost averaging up and down.
13/02/2023 Do you plan to acquire companies that provide float like Berkshire’s insurance operations?
We admire Berkshire and love companies with float, but we do not specifically target them. We do not own any today. If we found one within our circle of competence, at a fair valuation, and it was a good fit, float would be a plus. But it is not a core criterion in our acquisition strategy.
20/04/2023 How will your growth journey look regarding M&A?
Today Daniel mainly scouts for new acquisitions. For several years we have approached high-quality companies with strong entrepreneurs, often before they are even for sale. This slow but reliable process allows us to build relationships and really understand both the people and the business before a purchase. We enjoy this way of working and find it robust, though we also consider companies offered through brokers.
Looking ahead, we believe we can absorb around 5 acquisitions per year, though the number could be higher or lower depending on opportunities. We constantly aim to improve by targeting companies with strong earnings, solid cash flow, and niche products. Over time we may pursue larger companies or increase the pace, but for now we feel our current approach is working well and allows us to keep learning without making big missteps.
20/04/2023 How do you value companies, and has that changed?
We aim to recover our investment within five years based on a realistic forecast agreed with the seller. If both sides believe this is achievable and fair, then we proceed. We have followed this approach since 2006, and it continues to serve us well.
While the principle has not changed, the type of companies we acquire has evolved. Early on, limited organic growth meant that five years roughly equaled five times earnings after tax. Today, with more growth potential in many targets, the multiple may be higher. Still, we remain focused on future cash flow rather than multiples.
20/04/2023 Do you conduct formal post-acquisition analyses?
We do not have a formal process, though we believe we should. Carina will be helpful in building that framework so we can evaluate acquisitions more systematically. Over the years, we have done such analyses on occasion, and the results have been positive. Our earliest acquisitions are now robust and profitable, showing that we know how to run small technology-driven companies if we have the time.
Even without a set framework, we constantly discuss results. Unlike buying listed companies, where the outcome is clear-cut, acquisitions here can evolve. Sometimes an initially weak acquisition turns strong with the right management, or a good one can be hurt by mistakes. We also naturally follow up through earn-outs over one to three years, which spread risk and align incentives. Overall, while we still consider ourselves learners, we feel confident in our ability to handle challenges and improve companies over time.
20/04/2023 Can you share examples of recent acquisition targets you declined, and why?
We always review many companies, sometimes signing non-binding letters of intent and starting due diligence. In one recent case, after digging deeper, we found the company less robust than expected. The numbers seemed slightly inflated, and the administration was overly dependent on one or two older individuals. While we could have taken it on and tried to improve it, the workload would have been very high. Since we never renegotiate prices mid-process, we chose to walk away.
Our philosophy is to prefer higher-quality companies that run smoothly, even if they are more expensive. We are willing to pay for quality because it saves us time and risk. A company of the same size and earnings but with strong management, solid policies, and everything working like clockwork is far more attractive to us than a cheaper deal that would require heavy fixing. That is how we define higher-quality acquisitions.
20/04/2023 Was there a company you acquired that turned out to be a bad investment?
I consider myself lucky because I do not dwell on regrets. Everything that has happened made Technion what it is today. It is easy to look back and say we should have done differently, but each decision taught us something and made us stronger. We are a better company today than five or ten years ago.
The important question is whether we made the best decision possible at the time with the knowledge we had. If yes, then it was the right decision even if hindsight shows challenges. Emotions can sometimes lead us to fall in love with a company or entrepreneur, so we must guard against letting feelings outweigh facts.
20/04/2023 Will Technion ever consider acquiring a publicly listed company?
Never is a long time. Our core model is to buy private companies, which we believe is the best allocation of capital given our size and experience. Hunting bargains among listed companies carries more risk and complexity.
That said, we would never rule it out completely. If an extraordinary opportunity arose, say, a high-quality company at an incredible discount, we would consider it. But for now, our focus remains firmly on unlisted businesses where we have proven success.
20/04/2023 Will you ever do share buybacks instead of acquisitions?
We aim to be better capital allocators than to resort to buybacks. If we cannot find better uses for capital, then we are not doing our jobs properly.
Additionally, since we are listed on First North in Sweden, share buybacks are not allowed. So for now, it is not an option.
06/05/2023 How do you think about capital allocation at the subsidiary level?
We try to keep it simple. When we acquire a company, our model is to get our money back within five years. That becomes our hurdle rate. For example, if we buy a company with little growth, that translates to a price-to-earnings multiple of about five. Subsidiaries can reinvest cash if they can beat that hurdle on a risk-adjusted basis, whether it is through a new machine, opening a market, or expanding operations. If they cannot, then the cash flows back to headquarters where we redeploy it.
At the same time, we allow local management to pursue small projects that might not meet the five-year hurdle but keep them energized. We see that as part of maintaining the decentralized structure and sense of ownership. Cutting off every pet project to maximize short-term returns would ultimately hurt us in the long run, because it would weaken motivation and culture.
06/05/2023 Why did Technium pay a dividend, and how do you view dividends in capital allocation?
We disliked paying that dividend. Management did not think it was good capital allocation, because we consistently earn a return on equity close to 25 to 30 percent. Keeping the cash allows us to continue compounding at that level, which is better than distributing it. If management cannot redeploy capital effectively, then management should be replaced. Only if that fails should dividends or other means of returning capital be considered.
That said, dividends are ultimately a matter for the annual general meeting. In this case, the largest shareholder wanted a dividend, and so it was approved. But this year, the AGM decided not to pay one and instead to reinvest all cash into acquisitions.
06/05/2023 Would you consider share buybacks in the future once you move to a main listing?
On First North we cannot buy back shares, so it is not part of our mandate today. But hypothetically, if we were trading at a price-to-earnings ratio of one, I would mortgage my own house to buy more shares, and yes, buybacks would clearly be the best capital allocation.
In practice, our mandate is to buy companies, because that is where we can create long-term compounding. However, if at some point our shares are so undervalued that buying them back offers a better, risk-adjusted return than acquisitions, then of course it would make sense. It is about comparing the alternatives, not about being dogmatic.
06/05/2023 How do you balance acquisitions with potential share buybacks?
At normal valuations, buying new quality companies is the best use of capital. But if things ever reached an extreme, say our shares traded at price-to-earnings of one, then yes, buybacks would be clearly superior. In that case, we would absolutely consider it, provided we were allowed under the rules.
What we will never do is start a repurchase program simply because we have excess cash. Too many companies make that mistake. Any buyback must be clearly better, risk-adjusted, than an acquisition. Otherwise, our focus will remain on buying companies.
06/05/2023 Would you issue shares to finance acquisitions or raise capital on a main listing?
We do not want to pay with undervalued shares, because that would harm existing shareholders, ourselves included. But we also do not want to pay with overvalued shares, even though some argue it is smart. That would eventually hurt the new partners we bring in, because intrinsic value always reverts. Integrity matters to us; we want acquisitions to feel fair on both sides.
If we list on the main exchange and raise capital, we would be transparent about it, just like Buffett and Munger were. If we felt the share price was too high, we would say so, because issuing at that level would not make sense for long-term shareholders. Transparency and fairness guide our decisions, not opportunism.
06/05/2023 Under what conditions would you raise capital through new shares?
Personally, I would only want to raise money if the share price was somewhere close to intrinsic value. I cannot define that down to a single number, but it should be within a reasonable span. Our aim is to do this forever, not just raise cash, make a mistake, and then move on. We want long-term partners who believe in what we are doing, and that requires fairness.
Reputation matters deeply to us. We do not want investors to feel misled by buying something worth much less than they paid. Even if technically every investor must do their own research, people still feel betrayed when they lose money due to overvaluation. So we would not issue shares at inflated prices. We want our reputation to be built on trust with both entrepreneurs and investors, similar to what Berkshire Hathaway achieved.
06/05/2023 Under what conditions would you raise capital with new shares?
I would only want to raise money if our shares were close to intrinsic value. It is a wide span and hard to define exactly, but the point is fairness. We want long-term partners who trust us, not investors who feel betrayed. Reputation matters enormously, both with entrepreneurs and with shareholders. We want our performance to be judged on earnings per share and business results, not on trading inflated stock. So if the share price were far above intrinsic value, we would wait until it returned closer before raising equity.
14/09/2023 How does Technion approach investors when raising capital, and why was the recent 175 million SEK raise necessary?
It is a bit of both, investors approaching us and us approaching them. To give some context, we reinvest all cash flow from our companies into acquiring new ones. We typically acquire about five companies per year, each with roughly 1 million USD in profit. Using a multiple of five, that equals about 50 million USD per acquisition, and in total about 250 million SEK annually. Our operating cash flow is almost enough to finance this, but the timing of cash inflows and outflows is uneven, making it hard to match perfectly. We also want to assure entrepreneurs that when we commit to a deal, we can follow through without delays.
Having this capital buffer gives us confidence and flexibility, even if it theoretically lowers returns. It also allows us to continue acquiring without being constrained by seasonal or timing mismatches. Over the past couple of years, institutional investors from around the world have shown strong interest in Technion, but the small free float limited their ability to participate. We saw this raise as a way to bring in high-quality, long-term shareholders while also supporting our pace of growth. Summer was an ideal window, since Sweden effectively slows down in July. We reached out to a select group of investors we trusted, received strong interest, and moved forward.
14/09/2023 How did you decide on the size of 175 million SEK for the raise?
We are not trying to be too clever or academic about it. Below 100 million SEK would not justify the effort required, and above 200 million SEK would create unnecessary dilution and be unrealistic given our acquisition pace. If we raised 300 million SEK, for instance, it would take too long to deploy effectively, which would be unfair to existing shareholders. Based on investor interest, 175 million SEK was a practical and balanced figure. There is nothing magical about the number, it simply fit the situation.
14/09/2023 How was the 5.8% discount to share price determined and negotiated?
We handled the process ourselves rather than hiring a corporate finance firm, both to save costs and because we already had the investor relationships. From experience, it is almost impossible to place shares in large blocks without offering some discount, and the industry standard is around six percent. Typically, firms set the price after the close of trading on the day of the transaction, depending on where the market settles.
We did things a bit differently. We wanted certainty upfront, so we fixed the price at 202 SEK per share, the closing price on the Tuesday we launched the raise. We told investors that regardless of where the market moved the next day, the price would stay at 202. That gave us clarity on the proceeds we would receive and the exact commitment from investors.
14/09/2023 What were the risks and benefits of fixing the share price at 202 SEK instead of using the typical market-close method?
Yes, you could say investors were lucky because the price went up afterward, but it could just as easily have gone down to 195 or 180. Fixing the price at 202 SEK made the process simpler and gave both sides certainty. For me, it feels natural, you know the price of what you buy before you go to checkout. The traditional corporate finance method is more like grabbing an iPad, going to the register, and only then finding out the cost. That always seemed odd to us, so we preferred transparency upfront.
14/09/2023 Why did Technion retain 99.7% of the raised capital, and what is the typical cost structure for such raises?
The 0.3% that we did not keep went to necessary costs: a solicitor in Sweden, a solicitor in the UK familiar with US regulations since we had some US investors, and minor administrative costs like printing new shares. Normally, when companies hire corporate finance firms, those firms take a larger percentage, sometimes just a few percent for very stable companies, but up to 15% if the company is distressed. By handling it ourselves, we kept almost all of the raised funds.
14/09/2023 What role did the board play in the decision and execution of the raise?
We proposed the idea before summer, arguing that the downside was limited and worth testing. The board agreed and supported the process. During the week of execution, Tuesday to Tuesday, with some weekend work, we updated the board daily so they were fully informed. Officially, they needed to approve the final issuance of about 5% dilution for 175 million SEK. Their role was oversight and sign-off, while we handled the execution.
14/09/2023 What was Aker Capital Management’s role as an advisor in the raise, and did they invest directly?
I learned a lot about fund structures during this process. Aker Capital itself is too large, with roughly 15 billion USD in assets under management, to invest directly in a company of our size. Instead, they have a fund called Braddock, which they own. Braddock does not have its own managers, so Aker’s team advises them and makes recommendations. In practice, Braddock made the investment, but it is formally “advised by Aker.” That is why the press release used that phrasing.
14/09/2023 Can you elaborate on Technion’s financing structure, terms, and interest rates?
We have three main parts. First, a large acquisition-focused bank loan that is earmarked for deals. Second, a smaller revolving credit facility for general purposes. Third, a checking credit for short-term needs like supplier payments. We are currently renegotiating with several banks, including our house bank, to secure better terms now that we are in a net cash position after the raise.
In Sweden, term loans are usually three years. With one year left, you typically roll them into new agreements. For slower-growth companies, the terms often remain similar, but for us it is important to think several years ahead to avoid mistakes. Interest is usually Stibor 90 (the Stockholm interbank rate for 90-day periods) plus a margin that moves depending on our debt level. Since raising capital, we are debt-free on a net basis, so I expect better terms than before, though absolute rates are higher given the market.
14/09/2023 How do you think about using debt versus equity in financing acquisitions?
I agree with your point. Debt can be more efficient because interest is deductible and it lowers the weighted average cost of capital. Finance professors love to make that case. But I also believe you can only die once. We want to go very far, so it is better to be slightly under-levered than at a theoretically optimal level that adds more risk. During 2008–2009 we saw firsthand the dangers of too much debt, and that painful lesson still shapes our approach. We use debt carefully but never in a way that could jeopardize the long-term journey.
14/09/2023 Why does Technion use three-year rolling credit agreements instead of longer maturities?
An eternal bond or even a ten-year bond would be very expensive. In Sweden the normal approach is three-year agreements that get rolled over, and in this case, sticking to the norm makes sense. As we grow stronger and generate more cash flow, we expect to secure better rates over time. Of course, there is a risk if the macro environment worsens, companies may earn less at the same time interest costs rise, a double hit. That is why we prefer to stay at a low debt level, so we can weather storms and, on the upside, benefit from more attractive acquisition opportunities when others with high debt are under pressure.
14/09/2023 What guiding principles define Technion’s approach to debt and profitability?
We want to keep net debt under 2.5 times, though in practice we have been far more conservative. Stability comes first, so that we can survive downturns and avoid taking existential risks. After that, we focus on profitability. Every subsidiary must not only create value but also capture enough of it to remain relevant. That way, they can reinvest in themselves and generate capital for us to deploy into new acquisitions. This discipline is at the core of how we aim to grow sustainably.
21/10/2023 Where does the margin improvement for the quarter come from, and how long do you usually follow acquisitions?
The last two acquisitions were very different. Stanwell Technique was a relatively quick process; we spoke with them for about six months before deciding to acquire. We liked their financial profile, the people, and the cultural alignment. It was a great case for diversifying and strengthening the group. Shell, on the other hand, has been a much longer relationship. Founded by Bengt Shil in the 1980s, the company developed naval weapon alignment systems that slowly gained traction with major defense accounts. I have been in discussions with Bengt since around 2015, and when he finally decided to sell, we were ready to carry their work forward.
On margin improvement, our existing companies performed at about the same level as the previous quarter, aside from Vima, which is project-driven and had an unusually strong Q3 last year. Excluding that, margins were slightly higher. Most of the improvement, however, came from newly acquired companies. Inspired by Jeff Bezos’ “bar raising” idea, every acquisition must lift the group’s average performance.
21/10/2023 Why don’t you acquire listed companies as targets?
We normally avoid listed companies because we aim to pay a price we can recoup within five years. Public companies are usually valued higher than that, so the economics do not fit. We have looked at them occasionally, but risk-adjusted, they have not been attractive.
That said, you never know. If circumstances change, we could consider it, but historically the opportunities just have not been good enough compared to private acquisitions.
21/10/2023 How do you feel about expanding to Germany, and about acquiring companies with succession problems?
For now, our focus is Sweden and the UK. We already have two companies in the UK and one in Ireland, and we want to expand that footprint before considering other geographies. Sweden remains our home turf and priority, while English-speaking markets are our natural second step. Germany or other regions may be possible in the future, but not yet.
On succession, we prefer acquisitions where succession is already in place or where the founder stays on. We also buy from owners who want to retire, and in those cases we manage succession over two to three years with their involvement. However, if we need to lead the succession, we first assess whether we have the capacity to handle it. Because such transitions can impact performance, we adjust valuation accordingly by assuming lower revenue and margins in forecasts, which ensures the risk is priced in.
21/10/2023 Do you expect to make more acquisitions this year?
Yes, we always expect acquisitions because we are constantly in dialogue with potential sellers. Our pipeline includes both short and long relationships, ranging from months to years. While timing is uncertain, we remain active in pursuing quality companies.
Importantly, we do not think in terms of calendar targets. We close acquisitions when the people and the terms are right, not to hit a yearly quota. Deals happen when they happen.
21/10/2023 Do subsidiaries also make acquisitions, or only the mother company?
All acquisitions are made at the mother company level. However, we encourage subsidiary CEOs and teams to suggest targets, such as competitors, customers, or suppliers. Once identified, Daniel and I take the first contact and lead the acquisition process.
21/10/2023 Why did you stop disclosing acquisition prices after Valnek?
Sellers often prefer to keep their private financial details confidential, and since we are not required to disclose, we respect that. We also believe it provides a small competitive advantage not to reveal exact prices, as every deal is unique and circumstances differ.
If someone wants to backtrack, our reports can provide approximate insight, but withholding exact figures protects seller privacy and avoids setting benchmarks for future negotiations.
21/10/2023 Why is CapEx so low for the group?
We prefer companies with light balance sheets that do not require heavy investment in machines or inventory. That is one of our acquisition criteria. Of course, some of our factories need reinvestment when machines are used up, but we handle that carefully. Our goal is to keep CapEx as low as possible while still maintaining facilities properly.
21/10/2023 In turbulent times, will you use cash first or increase gearing?
During the financial crisis, high gearing and low cash reserves hurt us badly. Since then, we have focused on diversification and resilience. If times get tough, we will use our own cash first to support existing businesses. That is our priority.
Our group is intentionally diversified across industries and cycles, from housebuilding, which is highly cyclical, to sectors like electrification, defense, and medtech, which are more stable or even countercyclical. That structure should soften downturns, so a recession might hit only parts of our portfolio rather than all of it.
21/10/2023 How do margins typically evolve after acquisitions?
Often, sellers lose focus on operations during the sale process, which can cause a temporary decline in performance. We try to minimize this by addressing it openly from the first meeting and closing transactions as smoothly as possible. Selling a company is an emotional process, so we prepare for it. Usually, performance rebounds quickly once the seller sees that we are supportive and not over-regulating.
Looking long term, margins almost always improve. For companies we have owned for ten years or more, margins are significantly higher than at acquisition. This is also why serial acquirers like Lifco and Indotrade achieve such strong group margins over time.
21/10/2023 How is the acquisition pipeline?
The pipeline is healthy and consistent. We aim to acquire around five companies per year, though the exact number depends on timing. At any given time, we are in close discussions with 15–20 companies and meet 100–200 per year.
Most acquisitions come from our own scouting and cold calling rather than brokers. Many relationships take years to mature before turning into acquisitions. We keep building that network constantly.
21/10/2023 Could acquisitions at the holding level slow down the pace as Technion grows?
We do not see that as a bottleneck today. The constraint is not Johan and me; it is our ability to absorb new companies and manage them well. Sometimes issues arise because of bad luck, sometimes because we are still learning. Right now, that is the true bottleneck.
In the long term, we may need CEOs or business area managers with both operating and capital allocation skills. If and when that becomes necessary, we will adapt. At present, our subsidiary CEOs excel at running their niche businesses, and we handle acquisitions at the group level.
21/10/2023 Would you reconsider leaving minority interests in subsidiaries?
It could happen, and it has once in our history, but we strongly prefer full ownership. When we buy 100%, the entrepreneur receives cash, is free from the burden of ownership, and often becomes revitalized. We have seen them channel that energy into running and developing the business even further.
We dislike locking people into minority positions, as it can feel restrictive. Free people work better than people tied down. That said, we could consider it if the right case came along, but so far we have always found equally strong alternatives with full ownership. Many sellers later choose to buy Technion shares voluntarily, which we see as a positive sign.
21/10/2023 Are you more cautious with acquisitions in today’s high interest rate environment?
No, we do not adjust our pace. Acquisitions have been our strategy since the start, through different rate environments, and we continue as usual. When we began, rates were at today’s levels; later they fell to zero, which carried its own risks. We have kept the same method throughout.
Our valuation discipline is unchanged, we aim to recoup our investment within five years regardless of interest rates. Buying “cheap” is not the goal. We must build true partnerships where sellers feel respected. Paying a price that leaves them dissatisfied would damage trust and destroy value. Competition also exists, sometimes even from past offers sellers hold onto. We focus instead on finding the right companies and structuring fair, sustainable deals.
19/02/2024 When acquiring companies, do you help them restructure debt given Technion’s stronger credit rating?
Normally we do not acquire companies with debt. If they need capital, we provide support through our financial structure, which is typically stronger than that of a small company.
19/02/2024 How do you handle debt and banking relationships for acquired companies?
Most of our companies do not enjoy managing bank relationships. Since Technion can negotiate better prices and terms, we consolidate new acquisitions into our group banking solution. This makes the process smoother and more efficient for them.
19/02/2024 Is the 5-year payback target based on free cash flow?
That is our intention. It depends on the type of business, growth needs, and reinvestment requirements. Ideally, we target companies where profit after tax is close to free cash flow over time. Short-term fluctuations from receivables or inventory are natural, but across five years, we expect free cash flow payback.
19/02/2024 How well does Technion meet its acquisition payback targets?
Some companies repay quickly, others take longer. For example, we made mistakes with Narmaske and Navia, but have since turned them around. At the group level, return on invested capital exceeds the 5-year target because we keep companies healthy and sustainable over time.
Roughly 4 out of 5 companies meet the 5-year goal, while 1 out of 5 does not. That underperformer can drag the average, but we also have cases like Nagaspen and Neveg generating their acquisition price every 12–18 months. Meanwhile, homebuilders are currently loss-making but should rebound with the cycle.
19/02/2024 Why no major acquisitions since raising capital six months ago?
We did not raise money for a specific deal but to ensure we had the financial strength to act when the right opportunity appears. We want to be ready when sellers are willing, without waiting to arrange financing. We will not force ourselves to buy businesses we do not like.
Over time, we have learned from past mistakes and now target higher-quality companies than five or ten years ago. We aim for sustainable, profitable businesses with strong niches, and we want to constantly improve in selecting acquisitions.
19/02/2024 Why don’t you disclose operating margins or purchase prices for acquisitions like Nubis?
We avoid disclosing those figures for two reasons. First, for entrepreneurs in smaller towns, it can be uncomfortable for everyone around them to know how much money they received. Second, we want to keep our pricing structure confidential, as it provides a competitive edge.
What matters is that we always aim for payback within five years, and historically it has worked. On margins, we prefer companies with above-average profitability, but we do not flaunt those numbers out of respect for customers, suppliers, and stakeholders.
19/02/2024 How do you think about free cash flow in terms of dividends versus acquisitions?
With return on invested capital above 20%, we believe dividends are not the best use of cash. We prefer to reinvest free cash flow in acquisitions or our existing businesses, reduce debt when needed, and keep reserves for emergencies.
Dividends are the least effective tool in our view. Share buybacks would also be interesting, but they are not possible since we are not on the main exchange. Our focus is always on deploying capital where it earns the highest return.
19/02/2024 How are you thinking about earnings multiples paid for acquisitions?
We always aim to get our money back within five years. Normally that translates to about five times earnings if the company has a solid history. For growing companies, it is more complex, but the five-year payback principle is the basis of everything we do.
19/02/2024 When acquiring companies, do you help them restructure debt given Technion’s stronger credit rating?
Normally we do not acquire companies with debt. If they need capital, we provide support through our financial structure, which is typically stronger than that of a small company.
19/02/2024 How do you handle debt and banking relationships for acquired companies?
Most of our companies do not enjoy managing bank relationships. Since Technion can negotiate better prices and terms, we consolidate new acquisitions into our group banking solution. This makes the process smoother and more efficient for them.
19/02/2024 Is the 5-year payback target based on free cash flow?
That is our intention. It depends on the type of business, growth needs, and reinvestment requirements. Ideally, we target companies where profit after tax is close to free cash flow over time. Short-term fluctuations from receivables or inventory are natural, but across five years, we expect free cash flow payback.
19/02/2024 How well does Technion meet its acquisition payback targets?
Some companies repay quickly, others take longer. For example, we made mistakes with Narmaske and Navia, but have since turned them around. At the group level, return on invested capital exceeds the 5-year target because we keep companies healthy and sustainable over time.
Roughly 4 out of 5 companies meet the 5-year goal, while 1 out of 5 does not. That underperformer can drag the average, but we also have cases like Nagaspen and Neveg generating their acquisition price every 12–18 months. Meanwhile, homebuilders are currently loss-making but should rebound with the cycle.
19/02/2024 Why no major acquisitions since raising capital six months ago?
We did not raise money for a specific deal but to ensure we had the financial strength to act when the right opportunity appears. We want to be ready when sellers are willing, without waiting to arrange financing. We will not force ourselves to buy businesses we do not like.
Over time, we have learned from past mistakes and now target higher-quality companies than five or ten years ago. We aim for sustainable, profitable businesses with strong niches, and we want to constantly improve in selecting acquisitions.
19/02/2024 Why don’t you disclose operating margins or purchase prices for acquisitions like Nubis?
We avoid disclosing those figures for two reasons. First, for entrepreneurs in smaller towns, it can be uncomfortable for everyone around them to know how much money they received. Second, we want to keep our pricing structure confidential, as it provides a competitive edge.
What matters is that we always aim for payback within five years, and historically it has worked. On margins, we prefer companies with above-average profitability, but we do not flaunt those numbers out of respect for customers, suppliers, and stakeholders.
19/02/2024 How do you think about free cash flow in terms of dividends versus acquisitions?
With return on invested capital above 20%, we believe dividends are not the best use of cash. We prefer to reinvest free cash flow in acquisitions or our existing businesses, reduce debt when needed, and keep reserves for emergencies.
Dividends are the least effective tool in our view. Share buybacks would also be interesting, but they are not possible since we are not on the main exchange. Our focus is always on deploying capital where it earns the highest return.
19/02/2024 How are you thinking about earnings multiples paid for acquisitions?
We always aim to get our money back within five years. Normally that translates to about five times earnings if the company has a solid history. For growing companies, it is more complex, but the five-year payback principle is the basis of everything we do.
19/02/2024 Is any of the last capital raise being used for non-investing or operational purposes?
Our companies are self-sufficient and generate cash flow that flows to the parent company for acquisitions. The raised funds are not in a separate account but are pooled with group cash. Effectively, the money goes toward acquisitions, not operations.
19/02/2024 What if Swedish acquisition price expectations remain high for a long time?
We keep searching for companies that fit our way of thinking. Right now, we see many opportunities in the UK and are building relationships there. Over time, Sweden will also present good opportunities again, and we may expand into other geographies step by step.
We are in this for the long run and will not rush or force ourselves into poor deals.
19/02/2024 Do you have deals in the near future?
We cannot say in advance, but we did close one yesterday. We have a normal inflow of leads and feel good about the pipeline. Timing depends on finding the right companies, people, and prices. If expectations are too high, we would rather wait than do bad deals.
19/02/2024 Are you finding good companies but waiting for better prices? Could share repurchases be an option?
We cannot do repurchases because First North is not a regulated market. Regarding prices, high-quality private companies rarely become cheap. Entrepreneurs can always keep their companies and enjoy steady cash flow, so there is a natural floor to valuations. Even if market sentiment changes, it often takes time before sellers adjust their expectations.
19/02/2024 To what extent do you fund expansion plans of portfolio companies versus new acquisitions?
We always allocate capital where it earns the highest yield. We dislike heavy CapEx businesses and generally acquire companies with light balance sheets. Maintenance CapEx is supported, but growth CapEx is challenged unless it can clearly return our money within five years.
19/02/2024 Looking back, what proportion of acquisitions delivered the 20% expected returns?
Most of them have. At the group level, our return on invested capital shows that the model works, although some businesses take longer and some deliver much faster.
19/02/2024 Why did you raise capital but complete few acquisitions?
We already covered this: we want to be financially ready for the right opportunities, not forced into poor deals.
19/02/2024 How does 2024 look for acquisitions compared to previous years? Any new industries?
We cannot predict exact timing. Some deals take six months, others take nine years. We are constantly meeting entrepreneurs and believe we will keep finding better companies over time. The pace is not planned per year; we work efficiently and let opportunities happen when they align.
23/04/2024 Why is the hurdle rate set at 15% instead of higher when the company is still young?
We like to set ambitious goals but also want to ensure they are always achievable. The 15% hurdle rate, aligned with doubling earnings per share every five years, is a target we believe we can consistently deliver on.
For us, the exact figure does not change how we operate. Whether the hurdle rate were 10%, 20%, or 50%, we strive to do our best regardless. It is a guideline for how we think about the long term rather than a constraint on our efforts.
23/04/2024 Does Technion prioritize acquiring companies with pricing power or moats, or focus more on purchase price?
Pricing power and moats are important, but we consider many aspects when evaluating acquisitions. We look at the whole picture to find quality companies.
We are not interested in buying so-called cigar butts, cheap companies that lack long-term sustainability. We want businesses that will remain cash-generating a decade or more from now, even if the initial price is not the absolute lowest.
23/04/2024 How can Technion scale up M&A without sacrificing quality and returns?
We constantly look for improvements in how we scale. At present, we see no need to change our acquisition process. In my view, Daniel is like ten acquisition scouts in one, and our inflow of opportunities compares favorably with peers. We also encourage our managers and colleagues to keep their eyes open for prospects, and many enjoy contributing in that way. Increasingly, we also get referrals from sellers, friends, and people who have heard about us, which is very positive.
We are not aiming for sudden changes, but rather small adjustments to avoid big mistakes. Our pipeline is strong, and we are confident that we have plenty of companies to engage with, build relationships, and hopefully acquire over time. As we have said, our target is to acquire around a handful of companies per year, but it is not tied to a calendar. We act when we find the right quality, relationships, and hurdle rate. We even receive good prospects from shareholders, which we very much welcome.
23/04/2024 What lessons have you learned from earlier acquisitions where some grew strongly and others declined?
When we started, we had no external capital and could only acquire companies with cash generated from operations, meaning we had to focus on cheaper companies. As we grew, we gained more resources to acquire higher quality businesses. Companies also differ in life cycle position, and sometimes we help them get to the next level or reverse a decline by supporting operations.
Naturally, we are better at acquisitions today than we were 18 years ago, having learned from experience. We are still learning, but it is an evolving process. With more resources, stronger experience, and the team we have today, our capabilities are significantly stronger than in the early years.
23/04/2024 Will Technion pursue acquisitions in Swedish defense industry innovation given current geopolitics?
We focus on businesses where we can get our money back within about five years and then see sustainable long-term cash flows. That includes companies in the defense sector, but we avoid chasing trends simply because they are popular or boost short-term valuations.
We already own three companies connected to defense. Two were acquired long before the current geopolitical turbulence, and one discussion began years earlier when it was politically unpopular to buy defense companies. We believed in them on fundamentals, not fashion. Now demand has increased, and valuations are higher. We continue to look at the space, but not more now than before.
23/04/2024 What is the expected future rate of share dilution?
The answer lies with the Board. Currently, we have some call option programs in place, but no new program is up for decision at the AGM. We think share incentives are a good way to include colleagues in the company’s journey, and I will always push for ways to align them with ownership. At the moment, however, nothing new is on the table.
From an investor perspective, dilution can be concerning. That is why we focus on earnings per share. Any dilution must create more upside than downside, ensuring that long-term shareholders benefit from the growth it finances.
23/04/2024 Would you ever consider acquiring a serial acquirer within Technion, like Dino Polska?
We never say no, but it is not easy. Over the years, we have seen groups for sale and found that sometimes parts of them were interesting, but rarely the whole package. We have not acquired a serial acquirer yet.
The challenge is getting our money back in five years, which is our discipline. These groups often want valuations we are unwilling to pay because they have stock market alternatives. We remain curious and open to learning, but it is not a focus and does not occupy our minds.
21/07/2024 Would you consider listing Techno on another stock exchange to enable stock buybacks, and what factors would be required?
We have discussed this for several years and continue to do so. It is not something for the near future, but eventually it seems like a natural progression for us to be listed on the main market. At that stage, we would also have the opportunity to conduct share buybacks, which is an option we want to keep open.
21/07/2024 Do you plan to acquire minor stakes in public businesses when prices look attractive?
The future is unpredictable. At this moment, we do not see that as part of our strategy. Our approach is typically to recoup investment within five years, and such companies are usually valued higher on the stock exchange. That said, circumstances could change, and we remain open-minded about the future.
21/07/2024 Why is there a significant jump in CapEx?
The main driver is reporting under IFRS, which requires us to classify leases such as offices and factories as capital expenditures. For example, when we rewrite a lease agreement for ten years, it increases reported CapEx even though we are not buying new machinery. We do have some new long-term leases, and that accounts for most of the increase, along with some smaller items.
21/07/2024 Why did you acquire Avalara and what are its strengths? Will current management stay on?
Avalara is run by David, who took over from his parents in the early 2010s, and he will remain as CEO. We did not just find them, we found each other, as our business values and approach are highly aligned. Avalara has a strong field team, excellent operational discipline, and a high-quality product portfolio centered on energy-efficient air compressors. Their compressors use less energy than many competing products, giving them a strong position in the market.
They are a local UK manufacturer with close relationships to both suppliers and customers, which enhances product design, specification, service, and aftermarket support. They also benefit from a large installed base of thousands of machines that generate recurring aftermarket revenues, a strong sign of pricing power. In our view, they are among the best smaller-sized operators we have seen, and we believe their operational excellence can inspire our other companies over time.
21/07/2024 What hurdle rates do you apply in acquisitions, and what is your long-term EBITDA margin outlook?
We apply an inverse hurdle rate: we expect to recoup our investment within five years under a realistic forecast, adjusted for risk depending on earn-out structures. That is our guiding principle. As for group EBITDA margins, we already have the capacity to improve, and we are acquiring companies with above-average margins. Over time, this will lift the group margin. The pace is uncertain, but our ambition is clear. Looking at Swedish peers, margins have expanded meaningfully over the last decade, and we aim to be at least as good.
21/10/2024 Would you consider investing in companies in Germany, Austria, and Switzerland?
We are constantly looking for acquisitions, but right now our focus is Sweden and the U.K., along with other Nordic countries. Once we feel comfortable in the U.K., we may expand into another geography. We never say never to anything.
21/10/2024 Would you consider using Bitcoin as an investment on the balance sheet?
No. We understand the potential upside with Bitcoin, but we are not pursuing that. We want stability and assets we can truly trust ourselves.
21/10/2024 Would you consider share buybacks?
Currently, we cannot because our shares are listed on NASDAQ First North Growth Market. If we move to the main market in the future, that would become an available capital allocation tool. For now, it is not possible.
21/10/2024 Are underperforming businesses cyclical or inherently poor, and would you divest them?
It is always about people. There are no inherently poor businesses; they can be improved with the right leadership. We evaluate whether each can be made profitable. If not, we may do something else with it. Cyclical pressures we cannot avoid, but we can decide over time whether to keep or divest. Roughly a third of our companies currently lose money, compared to about 10% in a normal environment. With better macro or stronger leadership, many would be profitable.
17/02/2025 Under what circumstances would you divest underperforming companies, and how do you prevent subsidiaries from becoming complacent?
We have strong confidence in our ability to turn businesses around, but if a company cannot sustain itself, then we must act. That may mean winding it down into a small entity, merging it, or closing it temporarily or permanently. Our responsibility is to make the right decision to get things back on track. Many of our companies are able to run profitably, and it is our job to ensure that happens.
Our intention is to be long-term owners and do everything possible to increase cash flow over time. But if the world changes or profitability proves unattainable, we will shut businesses down. We are not in the business of permanent losses.
17/02/2025 Free cash flow conversion has been down and leverage rising. How will you fund acquisitions this year
Our main focus is making the companies more profitable, which will strengthen free cash flow. Subsidiary CEOs are incentivized through bonus programs that require strong free cash flow relative to results. We track this closely and work to improve it.
We will not over-leverage. Acquisitions will be done sustainably, funded primarily by operational cash flow. The largest source of funding will be the money we generate internally.
17/02/2025 Could you provide an update on the acquisition pipeline and priorities by sector or region?
Our two priority regions are the UK and Scandinavia. The UK has been a strong market for us, where we have ongoing activities and expect near-term results. Scandinavia, especially Sweden, is also in focus, and we believe we will close something there this year.
Sector-wise, we are agnostic. We look for companies less dependent on macroeconomic cycles and with risks uncorrelated to the rest of our portfolio, building a more robust group. We are not targeting a single sector but high-quality businesses across diverse industrial areas.
17/02/2025 How many acquisitions can you complete without expanding your team?
It is difficult to give an exact number, but I have promised an all-time high in transactions, and we intend to deliver. This is not about rushing to buy companies starting today, but about momentum we have already built that will carry through.
17/02/2025 What was the total cash acquired and consideration paid for acquisitions this year and from prior years?
We do not disclose more than what is already presented in our official reports. More details will be available in the annual report, scheduled for March 22. Looking at cohorts over the past four to five years, our valuation model targets payback in roughly five years. As a group, we have actually achieved payback a bit faster, though results vary by company. Some have paid back much faster, others slower, but overall the model works and we are paying what we should.
17/02/2025 What are your target return on equity (ROE) and return on invested capital (ROIC) in five years?
We do have internal targets, which can be inferred from our three financial goals. For example, when acquiring companies, we target a five-year payback, typically funded half with debt and half with equity. That structure implies our expected returns.
Internally, capital allocation decisions are benchmarked against what we can achieve through acquisitions. If a subsidiary proposes a major investment, we compare it to acquisition returns, which sets a minimum threshold for ROIC and ROE. While we adhere to this principle, we do not publish specific targets.
17/02/2025 Why is return on invested capital (ROIC) not one of Technion’s financial targets?
Our financial framework already incorporates metrics that drive value creation, including net debt to EBITDA, EBITDA margin, and EPS growth. While ROIC is important, we addressed this topic earlier by explaining how capital allocation is benchmarked against acquisition returns, which effectively embeds ROIC discipline into our decision-making.
17/02/2025 How has Technion’s acquisition capability developed over the years?
Before 2021, acquisitions were largely handled by Johan. Since then, Daniel has taken a very proactive role in contacting potential sellers, with Johan joining later in the process for face-to-face meetings. This division of work has accelerated acquisitions, freed Johan to focus elsewhere, and strengthened results. Today, Daniel runs much of the early-stage work independently, involving Johan later. Results will speak louder than words, but our acquisition engine is stronger than ever.
23/04/2025 Would Techno ever consider investing in the public market if extraordinary opportunities arose, like a 2008-style crash?
We never say never, but we are not thinking in those terms and have never been interested in it. We have had so much opportunity in the unlisted market, where valuations are far superior to the listed market.
In extraordinary situations, we might consider something unusual, but the bar would be very high compared to what we are doing today.
23/04/2025 At what point would you consider divesting low-performing companies, or will you always try to improve them?
The most important thing to emphasize is that our priority is to act in the best long-term interests of shareholders, which means growing earnings per share and increasing cash flow and returns on capital over time. This does not happen quarter by quarter but rather over the long term.
We have a preference for not selling companies and for holding the businesses we acquire indefinitely. That said, it is not a matter of religion or a fixed principle. If circumstances ultimately demand it, divestment is possible, but our orientation is always toward long-term ownership and improvement.
23/04/2025 At what point would you divest low-performing companies versus striving to improve them?
It is difficult to give an exact timeframe because it depends on the data. In some companies, we have made changes that will take time to show in the financials, sometimes three, six, or nine months later. Where we see absolutely no progress despite using the full toolbox, we are not the right owners. As stewards of shareholder capital, we have a fiduciary duty to consider alternatives, including selling to an owner who can take better care of the business. We will not allow losses to continue indefinitely, and if we do not see good trajectories, we will propose alternatives before the year ends.
23/04/2025 Which companies are you planning to sell, and are conversations already underway?
We cannot disclose that information at this time.
23/04/2025 How would you evaluate selling a subsidiary if approached with an attractive offer?
We are approached from time to time, usually by buyers interested in our best companies, offering mid-teens EBIT multiples. These offers are not interesting because we believe the cash flow is worth more reinvested within the group. Our priority is long-term ownership and compounding.
However, we are not in the business of carrying permanent losses. If we conclude that we cannot fix a struggling company, then we will seek a better home where someone else can. That is the principle we apply when evaluating divestments.
23/04/2025 Could some subsidiaries never reach group averages, and might that justify a sale?
Yes, some subsidiaries may never reach today’s averages, especially as thresholds keep rising. In such cases, another owner might see more potential, and selling could allow us to redirect energy and capital elsewhere. While our preference is to hold companies forever, the higher rule is doing what is best for shareholders in terms of earnings and return on equity. The ultimate priority is winning in capitalism, not holding on for holding’s sake.
21/07/2025 What net debt to EBITDA level is sustainable long term versus the 2.5x limit?
If we can be around two times or just below, that would feel ideal. Of course, during different development phases it can fluctuate slightly, but two is the target.
On a long-term basis, if we find a good acquisition that is a bit larger, it could stretch above two for the short term. If it is a good bet, we will not strictly hold to the 2.0 level.
21/07/2025 Does net debt to EBITDA include lease liabilities in covenant calculations?
Yes, lease liabilities are included, as well as potential future earn-outs. That is how covenants are calculated by our banks, such as SEB, which are quite rigid. We also report pro forma numbers, reflecting acquisitions as if they had run for a full 12 months, since banks want to see leverage on that basis.
21/07/2025 How do you view acquisitions versus performing and underperforming companies this year?
We see three legs in our business: acquisitions, performing companies, and non-performing companies. Ideally, we want only two, acquisitions and performing businesses, with the third being very small. At the start of the year, we said it would be a big acquisitive year with more than six acquisitions. We are at seven so far and not done yet, without making promises.
Performance is polarized. Many companies are performing very well, especially in the UK and some in Sweden, growing with 20% margins. At the other end, some companies are losing money, which is painful. As a group, the direction is positive, but the pace of improvement is too slow. Some turnarounds are quick, others plateau, but overall we are moving forward.
28/08/2025 By 2018 revenues were SEK 300m and income SEK 28–30m, how did growth develop?
When we started in 2006, turnover was maybe SEK 30m. It took years before we reached SEK 100m. Slowly, with free cash flow, we acquired more companies and grew organically. By around 2017, I suggested to the board and minority shareholders that we should list and raise capital. They agreed, and we did it in two steps: a pre-IPO private placement in spring 2018, then the IPO in 2019. We raised about SEK 100m in total, allowing us to acquire more companies. Instead of one per year or two years, we could buy two or three each year.
For many years, cash from operations funded acquisitions. During the initial period, Jonas, my founding partner, was CEO, targeting potential acquisitions and ensuring bank support. He left in 2009. In fall 2008, during the financial crisis, we realized we had built something fragile because we reinvested everything. We had no cash for a rainy day. We sold half the company to external investors, Vixar, who still hold around 10%. They bought it cheaply, but we needed the money to downsize during the tough Swedish industry period. After nine months, we returned to positive figures by summer 2009, but were half the size of the year before. Jonas quit, and I became CEO. From then, I had to learn his skill set, persuading entrepreneurs to sell to Teqnion despite our past collapse. It was a tough sell initially.
Competitive Advantage
21/10/2022 What is Reward Catering’s moat against competition?
In all our businesses, including Reward Catering, we aim to stay one step ahead of competition in design, functionality, pricing, and customer relationships. Reward Catering combines all of that and executes extremely well.
Ultimately, what ties our companies together is belief in people. Exceptional teams outperform competitors by working better together. It is like football , Manchester City became the best team in the world not by having a unique moat, but by having a stronger team.
21/10/2022 What are the competitive advantages of our companies?
We do not need to develop everything uniquely. We often buy companies that already have proven models and then help them become better. Some are unique in very narrow niches even in competitive markets.
The key is to never lose uniqueness. We work to strengthen it, stay close to customers, build long-term relationships, and maintain great application knowledge. Helping customers stay competitive ensures they stay with us.
13/02/2023 What will be Techneon’s durable advantage if M&A competition intensifies as you grow?
Our durable advantage is relationship building with entrepreneurs. Sellers see that we understand how hard it was to build their companies, and that trust matters. We are honest about what we want and the valuation we are willing to pay. Those who resonate with our approach sell to us because they know their company, employees, and culture will be in good hands.
A transaction is only a moment in time. We continue owning the company forever, welcoming its employees as coworkers and friends. Sellers who value that long-term continuity are naturally drawn to Techneon, and those are the companies we want to buy.
13/02/2023 How have subsidiaries responded to high inflation, and what percentage have pricing power?
Some subsidiaries with their own brands naturally have strong pricing power. Others sell niche or specialized products with deep application knowledge, which also gives them pricing leverage. A few supply large global customers like Scania and Volvo, and in those cases, pricing power is weaker. Overall, we are diversified across the spectrum.
We continually work to improve pricing by strengthening customer relationships and targeting niches where higher margins are sustainable. Pricing power is not absolute, it is on a scale. For us, it is cultural: do companies have the confidence to charge for value instead of defaulting to cost-plus pricing? That is something we emphasize as owners.
20/04/2023 Have you read Michael Porter’s Competitive Strategy and how has it shaped your thinking?
I personally have not read the book, and I cannot comment. One of us may have read it during studies, but not recently.
However, Daniel has read it and finds it useful as part of his framework. When evaluating companies, we often bring different perspectives. I tend to focus on people, products, and technology, while Daniel sometimes applies Porter’s five forces to better understand the competitive position. Many of our portfolio companies have carved out niches through decades of trial and error rather than formal frameworks, but Porter’s ideas still provide a useful lens in our evaluation process.
20/04/2023 What has the team done in the last quarter to improve competitive advantage?
It is hard to point to one thing, as our companies are built on many small improvements rather than revolutionary changes. Recently, we upgraded our internal monthly reporting system for subsidiary CEOs. This ensures they focus on the right figures at least once a month and also monitor staff well-being, since happy employees tend to do better work and stay longer.
More broadly, our approach is to take small steps toward improvement every day. Karina’s expanded role and ability to visit subsidiaries adds further strength, as her background helps refine our follow-up processes and oversight. These incremental improvements, across many details, are what collectively increase our competitive advantage.
06/05/2023 Why stay focused on unglamorous industrial niches instead of digital businesses?
Many digital businesses struggle to make money even with the smartest and hardest working people. By contrast, unsexy industrial niches naturally discourage competition, because nobody grows up wanting to be the king of a small industrial segment. That lack of glamour creates barriers to entry. We also believe in the Lindy effect, the longer something has existed, the higher the probability it will continue. Digital models evolve rapidly, but nuts and bolts will not be replaced by software anytime soon. For us, slower-moving sectors provide more reliable cash flows.
A good example is magnetic door closers used in buildings for fire safety. They are low-cost compared to the building itself, but highly regulated, critical for safety, and difficult to enter because of certifications, long sales cycles, and the need to build trust with customers over years. These niches may look dull, but they are durable, vital, and profitable.
06/05/2023 Beyond respecting entrepreneurs, what other advantages does Technium have in acquisitions?
At the subsidiary level, each company has its own moat, but at the group level one key advantage is clarity. We are upfront with sellers about what we offer and what we do not. For instance, we do not centralize functions like accounting, payroll, or warehousing. The company remains independent, and we do everything possible to preserve that feeling of ownership for the founder. Some entrepreneurs prefer higher bids elsewhere, but those who value culture and independence choose us. Clear communication creates self-selection, which we see as an advantage.
On top of that, while I cannot avoid repeating what has been said before, it remains true: we genuinely understand the entrepreneurial journey. Our CEO and team have all run small companies, so we relate to the challenges of reporting, regulation, and decentralization. That credibility resonates strongly with founders. Sellers trust that we will not impose unwanted efficiencies or disrupt their existing systems, which builds long-term alignment.
06/05/2023 Does being a Swedish company give Technium an advantage in acquisitions?
Yes, cultural factors play a role. In Scandinavia, the focus is often less on maximizing the absolute sale price and more on ensuring continuity, culture, and long-term success. Many founders of small companies, say with revenues between 2 million and 15 million USD, never set out to build a business. It just evolved, and they suddenly find themselves running a company. For many of them, a sale provides financial independence regardless of whether the price is 8 million or 20 million USD.
As a result, they tend to care more about who the buyer is, how employees will be treated, and whether the company will remain intact. This cultural mindset can be a competitive advantage for us compared to international buyers or funds that emphasize financial engineering. Founders often choose us because they trust we will safeguard the culture and identity of the business they built.
06/05/2023 How does Scandinavian culture influence entrepreneurs’ decision to sell?
You are right, Scandinavian culture plays a large role. Here it is common that children do not automatically take over the family business. Many entrepreneurs prefer their children to pursue their own paths. That creates situations where owners look for a good home for their company rather than simply passing it along.
At the end of the day, we measure ourselves by long-term earnings per share growth. To achieve that, we need strong cash flow from existing companies and disciplined acquisitions. What we pay for a company eventually shows up in EPS, so we are always upfront. We pay less than many others, but in exchange entrepreneurs know we will not relocate operations or abandon employees. In small towns, founders care deeply about their employees’ futures. They want to retire with pride, not guilt. For them, culture and continuity matter more than squeezing out the highest sale price.
21/10/2023 What is the moat of Technion as a holding company?
It is hard to define. We do not focus on building a traditional moat, but rather on getting better and staying curious every day. People and relationships with suppliers and customers are what make a business sustainable, and that is what we focus on. Over time, that may create a moat, but it is not our primary objective.
We do not have proprietary technology, intellectual property, or scale advantages. Our strength comes from softer values, culture, networks, and trust. Those intangible elements are what make the group resilient and effective.
21/10/2023 Do you have doubts about the firms you own?
I always have doubts. We try to imagine worst-case scenarios when acquiring and examine every risk we can identify. The entrepreneurial spirit of our CEOs is a strong positive, but our role as top management is to ask questions, provide strategic guidance, and prepare each subsidiary with the right strategy for whatever challenges may come.
In a way, that mindset could even be one of our moats. We assume things will get tougher and prepare accordingly, which helps us stay resilient.
21/10/2023 Are you looking for businesses with better recurring revenues, such as maintenance and services?
We focus mainly on companies selling physical products, ideally with regulation around them. Many of these businesses also offer services connected to their products, and that creates recurring revenue. It is not the main factor we target when acquiring, but it is something we try to develop over time because it strengthens the business.
Recurring revenue is attractive for investor relations, but it is not always permanent. What matters to us is finding companies that reliably meet demand in their niche, whether that is beer, weapon alignment systems, or other essentials. That kind of demand creates stickiness, even if it is not technically recurring revenue.
19/02/2024 Why don’t you disclose operating margins or purchase prices for acquisitions like Nubis?
We avoid disclosing those figures for two reasons. First, for entrepreneurs in smaller towns, it can be uncomfortable for everyone around them to know how much money they received. Second, we want to keep our pricing structure confidential, as it provides a competitive edge.
What matters is that we always aim for payback within five years, and historically it has worked. On margins, we prefer companies with above-average profitability, but we do not flaunt those numbers out of respect for customers, suppliers, and stakeholders.
19/02/2024 Why don’t you disclose operating margins or purchase prices for acquisitions like Nubis?
We avoid disclosing those figures for two reasons. First, for entrepreneurs in smaller towns, it can be uncomfortable for everyone around them to know how much money they received. Second, we want to keep our pricing structure confidential, as it provides a competitive edge.
What matters is that we always aim for payback within five years, and historically it has worked. On margins, we prefer companies with above-average profitability, but we do not flaunt those numbers out of respect for customers, suppliers, and stakeholders.
19/02/2024 Is Nubis a service company rather than a product company?
No. Nubis designs data center containment systems under its own brand. These products improve airflow, making GPUs and CPUs more energy efficient and lowering carbon footprint. That is where the value is created.
They also provide installation services, but that is only an add-on. The core of the business is the product design and brand.
23/04/2024 How do you plan long term, 10–20 years, to build a culture where companies want to join?
There is no single recipe. The key is to move slowly and avoid large shifts that risk damaging the culture. We want to grow steadily, constantly improve, and still remain true to who we are. That means making small changes while staying authentic.
When we meet business owners, they see that what you hear and see is who we are. We do not act differently in private than in public, and sellers recognize that. Over time, we now have a strong set of references, as former sellers can attest to how we treat their life’s work after a deal. That transparency and reputation are essential for our culture.
21/07/2024 If it is harder to be acquired by Techno than to win the Euro jackpot, why do some subsidiaries have low competitive advantages?
In the early days, we acquired whatever we could afford, which included some weaker companies. Over time, we have steadily increased the quality of our acquisitions. Broadly, we group our businesses into three categories. First are trading companies, which can vary in competitiveness but generate strong cash flows through long-standing relationships with both customers and suppliers. Managing these is something we have done well since the start.
Second are contract manufacturers, such as sheet metal suppliers to large truck companies. Those clients are excellent at pressuring margins, and although we maintain skilled workforces and certifications, it is a high-overhead, low-margin business. We no longer seek such companies; one example was acquired in 2018 when it looked cheap on paper but proved to be a value trap. The third category, which we now prioritize, are businesses with stronger competitive advantages and pricing power. Our focus going forward is to keep raising the quality bar of our acquisitions.
21/10/2024 What are the common traits of recent acquisitions, and why are they more resilient?
We have some cyclical companies, like contract manufacturers and house builders, but our focus now is different. Earlier, I believed we could outmaneuver cyclical swings by being more flexible than others, but that proved too complex. Today, we focus on businesses that are easy to understand, because human beings are always at the center. People need to be coached, encouraged, and supported, and that complexity is enough. We don’t need highly complex business models or products.
We target companies with simple business models and strong cultures, where people love what they do and stay long-term. In the past, I made mistakes buying housing companies because I loved the product, which is not a sound way to buy. Now, with Daniel and a stronger team, we pursue companies with great people and simple models. It is a very different approach from five years ago, and I am extremely happy about that.
21/10/2024 Can you explain the case for UKLM?
From the outside it may not look like an obvious great business, but the numbers are excellent. UKLM delivers lanyards with very fast turnaround, at the right quality and timing, to blue-chip clients like NVIDIA or Nintendo. These orders often come last-minute before major events, where being even a day late makes them worthless. UKLM has built a reputation for always delivering on time, which is critical for customers.
They carved out a narrow but defensible niche in a highly competitive, commodity-like industry. Competitors may offer lower prices, but clients value certainty over savings. If a supplier fails, the customer might lose their job. That reputation creates stickiness and pricing power, making it a strong business.
17/02/2025 What percentage of subsidiaries have little pricing power, and how does that affect the group?
Pricing power is not binary but lies on a spectrum. Some companies, such as those in housebuilding, currently have almost no pricing power due to weak demand and oversupply. At the other end, we have companies with highly unique solutions that can raise prices without affecting demand.
When evaluating acquisitions, pricing power is a key factor. We aim to acquire companies with untapped potential to increase prices while still growing. Pricing power is often a strong indicator of competitive advantage, and subsidiaries struggling today typically have weaker pricing power.
23/04/2025 Some say you should buy businesses an “idiot” could run. Do you agree, and do you have such businesses?
When we evaluate acquisitions, we look for companies where we understand how they earn money. That often aligns with the idea that a normal manager could run them successfully. We seek solid history, healthy margins, stable earnings, and low business risk. Over time, as we have had more capital, we have been able to buy companies that fulfill these criteria at higher levels.
From the beginning in 2006, we only relied on operational cash flow, which taught us to maintain a strict focus on positive free cash flow. This remains our bloodstream for sustaining acquisitions and growth. Therefore, we need business models that are understandable, sustainable, and manageable even in downturns, together with our coworkers.
To add, our litmus test is whether the company is truly a quality business. Some companies look profitable on paper but are heavily dependent on one entrepreneur. Without that person, profits would collapse. We avoid those. What we prefer are businesses with systems, processes, and teams in place so that operations continue smoothly without reliance on a single individual. Those are the companies we want to own.
23/04/2025 What key traits do you look for in companies before acquiring them?
We first look for financial stability and solid earnings. We prefer companies that sell physical products in narrow industrial niches, where they can dictate terms in their market. Ideally, they add value through knowledge of applications or regulations, fostering long-term customer relationships. These businesses are often stable, sometimes seen as boring or odd, but necessary to society and relevant for decades to come.
In addition, we look closely at the financials to ensure acquisitions are accretive to earnings per share, have sustainable return on equity and margins above our average, and demonstrate durable growth. Only after those fundamentals are confirmed do we consider softer factors.
23/04/2025 How do you evaluate opportunities in industrial niches where you lack knowledge or experience?
If we do not understand the business, we walk away. We look at hundreds of companies each year and only acquire about five, so we can be selective. Nonnegotiables include strong historical growth, sustainable margins, solid return on capital, and knowledge and responsibility spread throughout the organization, customers, and suppliers.
We avoid turnaround cases, startups, and typical contract manufacturers. We also recognize differences in culture and legislation across countries, which is why we focus on markets we already know well to minimize risks.
21/07/2025 Have subsidiaries benefited from synergies with each other?
Yes, we see synergies increasingly as the group grows. CEOs meet several times a year to exchange experiences, which creates soft synergies. In practice, some borrow tools and approaches from others and see quick results.
With roughly 35 companies today, there are natural touch points: some sell to the same customers and can open doors, some buy from each other, and many share needs in sourcing and marketing. For example, we are now centralizing expertise in areas like China sourcing and marketing, which should save costs and, more importantly, improve capabilities across subsidiaries over time.
28/08/2025 Do you still believe the right people can run any business?
I strongly believe the right people can manage almost any business through tough times without losing money. But that is not how to build a group like Teqnion with many subsidiaries. We cannot expect every subsidiary CEO to be a “Leo Messi.” We need competent individuals who can handle normal situations and still deliver solid returns. Building something that relies on superstars everywhere would be fragile.
I admit I was sometimes seduced by charismatic entrepreneurs. Many are likable and passionate, and when they truly care about their life’s work, you can trust them to make the right long-term decisions. They need only occasional support and recognition. But eventually, they will retire, and a replacement won’t have the same skills or relationships. That is why we now seek simple, understandable business models where successors can run the company well enough without extraordinary talent.
28/08/2025 Isn’t it paradoxical that acquisitions are about people, yet you want businesses not to rely heavily on them?
Yes, it is paradoxical. When we founded this in 2006, we thought, “An industrial group, boring and easy, let’s do it for a few years and then move on.” The opposite happened. It turned out to be extremely difficult and very fun. It is neither easy nor boring.
Operations
21/10/2022 Do we risk ending up with unrelated businesses, and how does the home office add value?
We add value by supporting and energizing the different businesses, mainly through scheduled board meetings and close work on strategy. We do not interfere in daily operations, since each company is the expert in its field.
I do not agree that our companies are unrelated. They are similar in size, specialized in technology or industrial niches that require deep knowledge of applications, standards, and regulations. All sell physical products, or services around physical products, with a focus on margins and cash flow. They may look different from the outside, but in reality, they are very much related.
21/10/2022 How does subsidiary management get compensated after the earnout phase?
If they stay on, they receive a normal salary. In addition, all our CEOs participate in an annual earnings-sharing program, where they get a share of their company’s increased earnings.
21/10/2022 How do you balance time between existing companies and new acquisitions, and can the model scale?
I am confident we can double activity with the current team. Daniel focuses heavily on scouting new acquisitions and often brings me along, so much of my time is spent with him on that. The rest of the team mainly supports subsidiaries on strategy and energy, not day-to-day operations. We can act as a task force if something breaks, but normally we stay high level. At present, headquarters costs are about 19.3 percent of sales, and we work to reduce that.
We are also testing a model where some daughter company CEOs take part-time roles supporting other subsidiaries. As more talent and confidence builds, we can scale this further without much headquarters cost.
21/10/2022 Are we changing anything in the Nordic serial acquirers or Berkshire models to improve them?
We look to the great ones for inspiration and try to learn from what has been done before. But we must build Technion in our own way. We are constantly evolving and focusing on being better at being Technion.
We designed the model to fit us personally, and that alignment matters.
21/10/2022 What is the most important KPI when evaluating acquisitions?
ROE is important, but it is not the only or most important KPI. We consider multiple filters: historical robustness, cash flow conversion, margins, and soft factors.
If a company fails on hygiene factors, we do not proceed, no matter how strong other metrics are.
21/10/2022 How do we encourage knowledge sharing between group companies?
We gather all CEOs a couple of times a year to share good and bad experiences, learn from each other, and build relationships. This has been very effective, with friendships forming and CEOs helping each other.
On top of that, we maintain regular one-to-one contact with all subsidiaries to exchange knowledge and provide support.
13/02/2023 What is the plan to handle Marquis City, Keyama, and other underperforming companies?
We always try to help subsidiaries that need support. Not all of the mentioned companies are struggling anymore. For example, Marquis City recovered well after the pandemic, with demand returning strongly, and they are doing fairly well now. We hope that continues. Of course, some companies require more attention, and we provide as much support as needed. We take a long-term and resilient approach with all of them.
13/02/2023 What is happening at Teltec, which has many vacancies including CEO?
Teltec is a fantastic company with its own products in Orebro, Sweden. We acquired it almost a year ago from two strong entrepreneurs, Thomas and Anders. From the beginning, they made clear they did not want to remain CEO long-term. They are both staying onboard, but we are helping find the right leader to take the company forward. Everything is as planned, and we are looking for the right individual to lead with them.
The vacancies reflect growth. Teltec is expanding more than historically, with no signs of recession on their horizon. They simply have too much to do and still have untapped pricing power. It is a fantastic company with a great team. Please apply for the positions, it is a strong opportunity.
13/02/2023 Have you shifted construction exposure from house building to other activities?
Yes, we are working to diversify the customer base. Since last summer, we have focused on a wide range of wooden projects beyond traditional house building, including public houses and schools. Our ability to move quickly and make fast decisions is one of our strengths.
20/04/2023 How does your incentive structure work for employees and sellers?
When we buy companies, we usually pay most of the money upfront and then use earn-outs over about two years. This creates an incentive for both us and the seller to ensure the company continues to perform well, and we have found it works effectively.
For ourselves and our subsidiary CEOs, we use a simple profit-sharing scheme. If profit in a given calendar year exceeds the average of the prior three years, then a share of the increase is paid as bonus. The more profit grows, the greater the incentive. Since the bar rises every year, it becomes harder over time, which we see as how it should be.
20/04/2023 How do you approach innovation if niche product trends shift?
We deliberately look for businesses that are unsexy and not trend-driven. The goal is to own companies whose products will still be needed 10 or 20 years from now. We avoid fast-moving areas like AI where platforms can be obsolete in months. Instead, we focus on physical products and niches that evolve slowly, supported by strong relationships with long-term customers.
That said, product portfolios do change. Because we work closely with customers, our subsidiaries adapt offerings over time to solve new problems. A company’s products today are rarely identical to what they offered a decade ago. That evolution is one of the most enjoyable parts of business, continuously developing solutions alongside clients.
14/09/2023 How does Technion coach subsidiary CEOs?
It is one of our most important and evolving questions. There is no one-size-fits-all. If we acquire a company where the CEO and owner remain, coaching is almost zero, we mainly learn from them while helping with reporting. Coaching is more intensive when the CEO is new to the company, the industry, or the role. In that case, we focus on explaining the Technion story, the company’s role within the group, and especially that the goal is not just revenue growth but sustainable cash flow at low risk.
The balance is difficult. Each CEO wants to reinvest for their own company, but in the group context, their top idea may only rank as the 127th best project overall. Coaching is about aligning them with capital allocation priorities without undermining their sense of ownership. We also support CEOs with practical help, recruiting, niche sales, or workplace issues, but avoid day-to-day operations. The aim is for them to feel supported and independent at the same time.
14/09/2023 How does Technion recruit CEOs for highly specialized companies in rural areas when succession is needed?
This is one of the hardest challenges we face and a key reason why we limit acquisitions to around five per year. Ideally, we buy companies with management in place, but sometimes the seller wants to retire. We require them to stay at least two years in some role. Recruiting the right successor takes a lot of patience. We have learned not to rush, because the wrong hire can destroy value quickly.
Our process involves extensive scouting, sometimes with recruiters but always with our own involvement in final stages. At least two people from Technion interview candidates, we run personality and logic tests, and we take references ourselves. The process can take well over a year, as in a recent case. Even then, fit is uncertain, since contexts are unique. It is difficult but one of the most critical tasks we undertake, and patience is the key lesson.
14/09/2023 How important are CEOs to Technion’s subsidiaries, and what challenges arise when replacing them?
We of course prefer to buy companies where there is already a “crown prince” or “crown princess” ready to take over. But it is not always possible. Replacing an entrepreneur-CEO is extremely challenging. These leaders often know every rule of thumb, every customer, and every nuance of their industry. Losing that knowledge can be very disruptive. It is similar to music, if you take away Jay-Z or Beyoncé and put in someone else with the same title, the results are not the same. Our subsidiaries are not that extreme, but it illustrates the point: CEOs matter enormously.
14/09/2023 How does Technion evaluate cultural fit for subsidiary CEOs?
We do not use formal surveys. Our companies are too small for that. Instead, CEOs should know their people directly and sense whether culture is moving in the right direction. Formal surveys can outsource responsibility, and we prefer day-to-day awareness. The CEO coaches also maintain open relationships with employees at every level, so if issues arise, we usually hear about them through informal channels.
We respect that each subsidiary has its own culture. We only require that it is a “good” culture, employees are cared for, the environment is healthy, and people work there for more than just money. Beyond that, CEOs have freedom. We protect existing cultures after acquisitions rather than trying to impose change too quickly. Signs like higher sick leave or turnover are hard indicators, but by the time those appear it may already be late, so ongoing informal contact is critical.
14/09/2023 How do you keep subsidiary leaders motivated after they gain financial independence from selling their company?
We rarely think about it. Once the transaction is complete, we do not place a “price tag” on someone’s head. Entrepreneurs are usually self-motivated, they want to improve their company, be better than last year, and take pride in being part of a winning group. Especially in smaller towns, it matters deeply to them that employees remain happy and that their legacy thrives.
Financial independence does not erase purpose. People still want to be part of something meaningful. We focus on creating an environment where work is fun, friendships form, and people feel supported. It may sound fluffy, but soft values matter. Many could earn more money elsewhere, but our role is to make up that gap with culture and purpose. In modern society, if someone cannot be happy with the compensation they already receive, another zero will not fix it. We believe fulfillment comes from belonging and building something lasting.
21/10/2023 Why do you focus on the industrial sector instead of areas like vertical software?
It goes back to the founding of Technion. Our peers like Indo Trade and Uptech were focused on small industrial companies, and we felt we understood that business. I have no background in software, so early on we decided to focus on areas we can grasp and where we can see relevance today, in ten years, and hopefully in twenty. We prefer businesses that provide products society will always need, even if the form evolves.
By sticking to industries we understand, we can be confident in long-term relevance and profitability. We also know how to make good money selling physical products, which makes our approach straightforward and durable.
21/10/2023 Do you support subsidiaries in finding employees?
Yes, especially when it comes to recruiting CEOs. We take primary responsibility for CEO recruitment and also support subsidiaries in hiring other key staff. We follow a strict process because getting the right people in place is critical for long-term success.
19/02/2024 Will subsidiaries be educated in a structured way on your acquisition approach?
We already gather all subsidiary CEOs a couple of times a year to share experiences and learn from each other. That family culture is important, and it grows organically. Over time, I hope we build more structure around it.
We also try to involve CEOs who are willing and skilled to think about acquisitions, sometimes getting introductions to suppliers or customers. Most CEOs prefer to focus on running their businesses, but having more eyes on opportunities is good as long as it does not distract from operations.
19/02/2024 Will subsidiaries be educated in a structured way on your acquisition approach?
We already gather all subsidiary CEOs a couple of times a year to share experiences and learn from each other. That family culture is important, and it grows organically. Over time, I hope we build more structure around it.
We also try to involve CEOs who are willing and skilled to think about acquisitions, sometimes getting introductions to suppliers or customers. Most CEOs prefer to focus on running their businesses, but having more eyes on opportunities is good as long as it does not distract from operations.
23/04/2024 How are subsidiary CEOs incentivized?
We use a yearly bonus system tied to the average earnings of the last three years. Subsidiary CEOs receive a percentage of earnings above that three-year average. The measure is based on earnings before taxes for the subsidiary.
There is also a requirement to maintain sound working capital levels. They cannot tie up excessive capital since Daniel and I need that flexibility to acquire new companies.
23/04/2024 What self-inflicted mistakes led to underperformance year over year?
We are not perfect, and in this case, relocations created issues. We moved two companies into new facilities, which reduced efficiency and earnings during the transition. We are not yet at full effect. Looking back, we could have planned better and allocated more resources to make the process faster and smoother.
Most of the self-inflicted pain visible in the numbers now stems from past decisions, not just this quarter. The companies we acquired, how we handled them, and the people we hired all affect performance today. These choices, made in previous years, explain much of what shows up in current results.
23/04/2024 When will the two relocated companies reach full efficiency, and how much growth will that enable?
It is difficult to predict because we cannot see the future. Both are strong companies, and our colleagues are working hard to settle into the new facilities. It will probably take a few more months before they operate at full efficiency. Moving is always a major drain on energy and cash flow, which is why we prefer stability when acquiring companies.
That said, relocations are sometimes necessary for long-term growth. These companies need more space and more employees to sustain their trajectory. While the short-term impact is frustrating, in the long run the moves are positive. If we were private equity owners planning to sell soon, we would never relocate them. But because we intend to hold forever, we make decisions that strengthen them for the future.
23/04/2024 How are you helping subsidiary CEOs grow beyond using external coaches?
We support them both strategically and operationally. Coaches work closely with managers who need them, providing insights, sounding boards, and guidance. On an operational level, we help with recruitment processes and special challenges outside daily work where subsidiaries may lack experience.
We get involved more strategically when things are stable, and more operationally when a company is struggling. The goal is to provide resources, knowledge, and support so that CEOs can grow into stronger leaders over time.
21/07/2024 What did you learn from the Marquis City planning and transition?
The biggest issue was poor timing and planning in moving the company into new facilities. We wanted to consolidate four locations into one to build a more efficient and cohesive organization. Unfortunately, during the move, the CEO suffered from severe exhaustion and could not continue, so we had to step in mid-process. That disruption, along with uncovering weaknesses in culture and operations, made it very challenging.
We have since put a strong management team of four or five people in place, and they are highly motivated to succeed. Turning around a weak culture takes time, as not everyone will join the new way of working. We learned that while we value trust in our decentralized model, we must adopt more of a “trust but verify” approach when local management insists there are no issues. Execution in reality is never as smooth as in PowerPoint, but everything is fixable and we are confident in the team.
21/07/2024 Why do you still need CEO coaches if you acquire excellent, experienced companies?
Companies are run by people, and people need encouragement, perspective, and someone to challenge their thinking. CEO coaches usually serve as chairmen of subsidiary boards. They guide long-term strategy and also act as a sounding board for managing directors who may not have anyone else outside their employees to consult. This provides encouragement, fresh ideas, and the combined experience of the group. It ensures no CEO feels isolated and that strategic goals remain in focus.
As we acquire higher-quality companies, the need for coaching per company decreases. For weaker companies, the ratio might be one coach for every three, whereas for stronger companies like Newbies, minimal support is needed. Our aim is not only to buy great companies but also to make them better, and the board structure we introduced in 2016 has helped us achieve that. While we continue to learn, the system works and is central to our model.
21/07/2024 Have you considered organizing subsidiaries into divisions?
We tried it briefly, but it was only on paper in reports and not how we actually operate. It was more about copying others than focusing on what works for us, so we stopped. For now, our decentralized model works very well, and we will keep it until a better structure becomes obvious. Splitting into Swedish and international companies could be one future option, but it is not on the agenda today.
21/07/2024 Why launch a merch shop, and is it a distraction?
It is a distraction, but a very limited one. The idea came from shareholders asking about it, and some of them actually set it up and run it for us. It is just a fun initiative that makes us and our shareholders smile. It also saves us time, since we no longer have to handle one-off merch requests ourselves. This is not core to the business, just a small side activity. Everyone needs some fun as well as focus.
21/07/2024 Will Marquis City become profitable now that it has a new facility?
Yes, we believe so. The new facility gives us a platform, but the real turnaround requires changing the culture and making people proud of their work again. That takes time, as it is about how employees see their jobs and customers. We are optimistic and determined, even if the cultural shift is not instant.
21/10/2024 Why did the order backlog decline this quarter?
I don’t have a quick answer, but we see that large order backlogs exist mainly in housing companies, which currently have limited order intake. Some niche companies also have long backlogs, but most of our profitable companies run with shorter ones. The backlog shows a trend, but it is not crucial for predicting future results.
Looking back three to five years, backlog correlated more with revenue and profit. Over time, since we prioritize finding great companies regardless of backlog length, it now says less about our future profit than it did before.
21/10/2024 Which companies are unprofitable besides the construction-related ones?
Heavy industry suppliers in Sweden are struggling because large global industrial customers have fewer orders, which puts pressure on us. There is also some fluctuation in defense, as many Western countries focus on personnel and material, not training or alignment equipment where we are strong. This causes projects to be postponed.
The macro environment in Sweden has made it clearer which companies underperform. Some did well financially during better times, and we didn’t take enough steps then to strengthen them further. Now it shows. Companies serving industrial customers are more affected. Market declines of 10–30% hurt, but even if demand falls, 70–90% still exists and we must capture that. If demand were down 100%, that would be different. Some companies also use the downturn as an excuse for not being profitable, but we need to be good enough to thrive despite market pressure.
21/10/2024 How do you replace subsidiary CEOs when they leave or retire, and how hard is it to find quality managers?
For the right people, it is one of the best jobs in the world, running a business, being responsible for employees, customers, and suppliers. But recruiting the right person is extremely difficult, and after 18 years we still won’t perfect it. Acquiring companies is easy compared to finding strong leaders to run them. We often acquire from founders who know every detail of their company. A new CEO cannot replace all that knowledge, so compromises are inevitable.
This is why our CEO coaches are so important. They are experienced leaders who support new subsidiary CEOs in both business execution and leadership. Getting the right people is the critical challenge in scaling a group like ours. A wrong hire can quickly destroy a company, large or small, which is why we treat recruitment with the greatest respect.
21/10/2024 Has there been much turnover in subsidiary management?
Yes, we have replaced managers over the years. Recruiting the right people is hard, and we’ve learned that advertising for CEOs often yields the wrong type. We now rely more on headhunting through networks, which works better. Some managers also leave because they do not fit the culture. We demand high performance, and if people cannot cope, they either leave or we ask them to. It is part of our everyday business.
21/10/2024 Why did external costs rise 47% year on year?
Travel costs increased as part of sales efforts, some necessary and some not. Marketing spend also rose, and in my view it was too aggressive and not properly evaluated. That will change.
We emphasize that marketing must deliver clear returns: every unit spent should generate at least one unit of gross profit, and realistically 3x to 5x. Some subsidiaries are not living up to that standard, and we will ensure it is corrected.
21/10/2024 How much time is spent managing underperforming businesses, and by whom?
It involves all of us, but the first line is the CEO coaches. They support each other and use input from us. We always spend the most time on struggling companies, which changes depending on the cycle. Right now, we are very focused on where we can do the most good in the short term.
21/10/2024 How do you improve sales effort while managing the portfolio and acquisitions?
We prioritize our time, focusing on activities with short-term impact. The model is to have diversified subsidiaries that mostly run themselves, but when some need support, we step in. In the current tough economy, with some companies not performing even in good times, we must work harder on basics: sales, cost control, and operational improvements. Daniel remains focused on acquisitions, while the rest of us concentrate on strengthening the portfolio.
Sales efforts are especially important because our companies typically have strong product platforms and customer relationships, which should yield high margins. When activity drops, profitability suffers. Pushing active sales is a “simple switch” that can drive results. A good example is Lundahl’s Transformer, where a new CEO has boosted activity and we already see improvements. This motivates others: when you engage customers, results follow. While the quarter is tough, we remain confident in the future because we have great people across the group.
17/02/2025 Can you explain your operating model, including KPIs, manager oversight, and changes to the decentralized approach?
We operate about 30 subsidiaries, each run by its own CEO. At head office, CEO coaches support them and monitor performance. If trends turn negative, the coaches step in and demand answers. If satisfactory plans are not provided, we help create action plans and ensure execution. If that still fails, we may conclude the CEO is not right for the role.
We have acknowledged shortcomings in this process, and over the past year we strengthened KPI monitoring and closer follow-up. Most companies perform very well, but a few need more attention. We are addressing this more assertively, including replacing four CEOs in Q4 2024. The lesson has been tough, but it will leave us stronger. Our decentralized model remains, but we intervene when necessary. Companies performing well enjoy autonomy. If not, we demand action plans, provide our own if needed, and change leadership if execution still fails.
17/02/2025 Why weren’t CEOs already push-selling despite having bonuses, and have you changed many of them for that reason?
It is not as simple as paying more to get better results. It also comes down to personality and having the right person in the right place. Over the past year, we have shifted our hiring focus toward individuals with stronger business mindsets and clearer views on how to make money. Previously, we may not have been as effective in this area, but since last year, we have placed much higher emphasis on it.
17/02/2025 With the weakening performance in 2024, is there more tension between the parent and subsidiaries, and has Technion become a less fun place to work?
Yes, of course there is more friction. We have been more active with subsidiaries, demanding accountability from those responsible. If they are not run well, there will be friction. It is not fun, but it is necessary and part of our job. That said, we remain proud of our group, team, and culture, and we know we will succeed in the long run.
It is more fun when results improve, because we like winning. When results decline, we lose sleep, and it is less fun. We want CEOs who also feel that pain and take full ownership when performance is weak. That sense of responsibility is the only way to make companies better.
17/02/2025 What is Technion’s thinking on AI tools for productivity gains and sales growth?
We use AI tools extensively ourselves and they have been invaluable in saving time, improving quality, and providing deeper insights. Personally, I would not be able to do the amount of work I do now without them. At the subsidiary level, adoption depends on each CEO. Some embrace AI, for example in marketing and ad creation, where it saves significant time and money. Others are less interested but still run their businesses very effectively in other ways. In those cases, we do not push it, consistent with our decentralized model.
Within the group, we share best practices. When one company sees good results from AI tools, others often follow. This peer learning helps us improve across the portfolio.
17/02/2025 How are subsidiary managers incentivized?
They receive a bonus as a percentage of annual profit growth, subject to conditions. If results decline, the negative bonus carries forward and is netted against future bonuses. Managers must also deliver sufficient free cash flow to receive the full bonus. In addition, a portion of high bonuses must be used to buy Technion shares on the open market, which must be held, further aligning incentives.
23/04/2025 Can you elaborate on the scrapping of inventory and equipment write-downs?
We carried out restructuring in some subsidiaries, and those projects led to related write-downs of inventory and equipment.
23/04/2025 How do you expect relocation to affect margins in contract manufacturing?
Margins in contract manufacturing have historically been very thin, and we do not expect them to reach the levels we see in other industrial segments. Even when run well, these businesses operate at lower margin levels than the companies we typically acquire.
23/04/2025 Do you charge fees to subsidiaries, and could their P&L understate profitability?
Yes, we charge subsidiaries a management fee for services we provide. That is the only adjustment, and otherwise their P&L reflects actual performance.
23/04/2025 How does HQ shape culture in a decentralized model with autonomous subsidiaries?
We lead by example. We gather all CEOs a couple of times a year to share culture, information, and build relationships, sometimes over a beer. We emphasize discipline in how we use money. Our role is to grow capital, not spend it on luxuries. We compete to live cheaply, maximize profit, and reinvest in new acquisitions. That is the culture we live every day, and we hope it reflects across the group. By showing consistency in actions and decisions, we set the tone for long-term thinking, accountability, and humility.
23/04/2025 Do you place a Technion culture person in each company to monitor and guide?
Yes. Every company has at least one culture representative, usually serving as chairman, to review monthly reports and provide guidance. Beyond that, there are frequent interactions through both formal and informal channels. Our headquarters finance team, including Maria, Malia, and Jonathan, engages continuously to ensure reporting quality.
The guidance varies. Experienced CEOs with strong track records are given longer leashes, while new or turnaround situations receive close monitoring, sometimes almost at a co-CEO level. We expect managers first to prove they can handle the responsibility of leading a company before adding their own “color.”
23/04/2025 Do you expect synergies between subsidiaries over time?
Yes, although we do not actively pursue them. As the portfolio grows, some businesses naturally end up closer together in markets or supply chains. When both sides want it, synergies develop, especially in sourcing or sales.
21/07/2025 How will adding three new subsidiary CEOs plus one interim CEO improve operating performance?
We have several new CEOs who look very promising, with a couple more joining in the next month. They appear to be strong leaders, and while changes at that level always have an impact, in this case we see very positive effects.
Some of them face significant challenges, but the overall trend is encouraging and headed in the right direction.
21/07/2025 How will organizational changes affect subsidiaries and your decentralization model? What are the risks of losing autonomy?
Decentralization remains at the core of our model. It works when we have leaders with the capabilities, ownership, and direction to run their businesses effectively. When we see signs of deterioration, we must act faster, first by asking the CEO to explain and present a plan. If the plan is sound, we support them fully. If not, we provide the map and ask them to implement. Trust but verify is the principle.
As the group has grown in size and across jurisdictions, we cannot rely on “feel” anymore. We now track concrete metrics to monitor subsidiaries. If metrics show a negative trend, we demand corrective actions. If the CEO lacks the skills or tools, we provide closer support and follow up much more quickly than before. Autonomy remains the goal, but only when performance and trust are intact.
21/07/2025 How will country managers for the UK and Sweden oversee especially smaller subsidiaries
It is the normal way of operating but done on a more professional and closer level. We have always followed KPIs, but at times too softly or too slowly. Now, we are demanding immediate responses and action plans from subsidiary CEOs when performance lags.
If a CEO cannot produce a viable plan quickly, we step in with support to ensure necessary changes. Country managers are responsible for this tighter oversight and for ensuring the subsidiaries are moving toward healthier, more sustainable performance.
21/07/2025 What performance metrics are implemented across subsidiaries, and who is responsible?
Each subsidiary CEO is responsible for ensuring strong earnings and cash flow. We track earnings, margins, and return on capital. If return on capital falls short, actions are required to restore performance.
This year, we clarified five KPIs across profit levels, margins, and capital returns. As long as they are on track, CEOs operate with full autonomy, subject to board instructions. When one or more metrics turn red, escalation follows, first to country heads or CEO coaches, then to us. We believe this structure will strengthen performance going forward.
21/07/2025 Are you satisfied with the trajectory of key metrics and culture, and how do you foster trust and transparency with subsidiary CEOs?
Culture is built through how we interact and the relationships we form. Autonomy is important, but it must be paired with close monitoring of meaningful metrics. Some CEOs reach new levels of complexity and need outside support, which we now provide more systematically through country managers. These managers ensure that performance metrics are tracked consistently and that transparency is demanded across the group. Problems must be raised first in every discussion, and we strive to build a culture where issues are shared openly and early.
An anecdote from 2021 illustrates this: during a visit, a subsidiary CEO ran out to admit miscalculated earnings before we even stepped inside. That openness shocked Daniel in a positive way, and it is exactly the type of trust we want to encourage. We achieve this by talking about it often, leading by example, and never punishing honesty.
As for performance, we believe the operational low point is behind us, and the trajectory is upward. That makes us cautiously happy, but we are not satisfied with the speed or momentum. We see much more work ahead and intend to use the current momentum to push harder.
28/08/2025 After Jonas left, what was your process for acquisitions?
After restarting in 2009, we weren’t seen as serious contenders, so brokers ignored us. I mostly cold-called potential businesses. We were limited in size because sellers expect cash. One key change was focusing only on companies that didn’t need fixing, even if small. Jonas and I initially ignored that rule, buying turnaround cases we could afford, which required me to work operationally in them.
After Jonas left, I enforced the rule: buy things that don’t need fixing. As we grew and had more cash, we could target higher-quality companies.
28/08/2025 How did acquisition criteria evolve from 2009 to 2019?
We started as a distribution company with exclusive rights to sell products in Scandinavia, similar to Bergman & Beving. At first, these were all we could afford. Over time, brokers began approaching me, and I looked more broadly for industrial niche companies selling physical products.
During that period, I bought companies where I felt we could add value, even if I didn’t think long term. Some were simplified distributors assembling components into kits and delivering just in time for production. They add value but are harder to scale than owning your own brand or product. I also acquired contract manufacturers, which in retrospect was unwise because they don’t meet our criteria of being non-cyclical, light balance sheet, high return on capital, good margins, and pricing power. At the time, they seemed cheap, but they weren’t aligned with our strategy.
28/08/2025 What drove your short-term thinking at that time?
Many factors influenced me. Coming from founding and growing a company slowly, I was constantly trying to do everything cheaply. I’m stubborn, so I wanted to understand everything myself and asked for little outside help. We were just two people at head office from 2009 until 2018. These constraints forced me to try things others might have advised against.
There was also pressure to show progress to shareholders and the board. Some acquisitions I shouldn’t have done were attempts to prove we could grow, buy companies, and manage a versatile group before the IPO. It was about showing that Teqnion could expand and handle diversity across sectors. That was somewhat true, but I wouldn’t do it today.
28/08/2025 In Q3 2024 you mentioned buying Hem21 despite cyclicality. How did you view that decision then, and has it changed?
When building a relationship with a potential seller, we try to get to know them well. You can tell early if they are true entrepreneurs who built sustainably and survived economic cycles. They often explain how they would handle a downturn, not just endless growth projections. Such people are great to do business with because they already consider potential future challenges.
Yes, I emphasized people. At the time, I believed strong teams could manage a business even in cyclical industries. That influenced some acquisitions, including contract manufacturers.
28/08/2025 How do you now weigh the founder versus the business itself when acquiring?
Looking back, I focused too much on the person. Fortunately, Daniel complements me well by focusing on numbers, data, and the business itself. He is the investor, the numbers guy, the analytical brain. I handle the softer aspects, such as judging people and culture. Together, we balance each other in acquisitions.
28/08/2025 How has the acquisition process changed, and how do you generate targets today?
It has gone in cycles. In Sweden, especially over the last five years, we have done much of our own outreach because serial acquirers became so popular. But brokers remain important, especially abroad. When Daniel encouraged us to look outside Sweden, we traveled in Europe and realized entrepreneurs everywhere share the same qualities. That was fantastic to discover. Our first non-Swedish acquisition was in the UK, and since then we have stayed there.
Today we focus on Sweden and the Nordics, where we still see opportunities, and the UK, where we have a strong pipeline. In the UK, Daniel tried direct outreach but found it slow. We built strong broker relationships instead. They know we are easy to deal with, respond quickly, and keep promises, so they bring us good leads. We also benefit from referrals when former sellers recommend us to friends, which is very rewarding.
28/08/2025 Is Daniel doing outbound alone, or does he have a team?
Daniel does about 99% of the work: building the pipeline, having initial conversations, and screening leads. When he wants a second opinion, he brings me in. I also keep some conversations going in Sweden, but Daniel drives the acquisition process.
28/08/2025 How does the review process work for potential acquisitions today?
The first step is very quick. We look at financial numbers and see what is available. Even with just a year or two of data, you can judge where earnings are. If they are high enough, we check whether it is a light balance sheet, whether free cash flow is strong, and what type of product and business model they have. It is a quick filter to decide if we dig deeper.
28/08/2025 What counts as “high enough” earnings today?
It has evolved. Today we look for businesses with at least SEK 10m in annual earnings. When we started, it was more like a few hundred thousand SEK.
28/08/2025 Do you have a minimum margin or return on capital requirement?
We are not rigid, but we want at least 15% net margin, preferably higher. Return on capital is also important. If the balance sheet is light and margins strong, most earnings convert to cash. Then we negotiate a price that lets us recoup the investment in about five years.
28/08/2025 Do you communicate valuation expectations directly to entrepreneurs?
Yes. Many factors come into that discussion, but we try to be quick since our valuation rules are strict. We meet many good companies, and only a few value selling to us over others who might pay more. By laying it out quickly, we save everyone’s time.
28/08/2025 When do you typically start the valuation conversation?
It depends. Normally, if the financials look right, we want to have a conversation. Brokers familiar with us already know our pricing. Usually, after the first meeting with management, we explain our valuation so expectations are clear and no one invests too much emotion or time unnecessarily.
28/08/2025 How exactly do you communicate the valuation approach?
We explain that we want our investment back in five years, using earnings after tax as a proxy for free cash flow. That becomes the basis of the valuation. Often, the company is on a growth trajectory, so we use an earn-out structure. This incentivizes the seller to stay on and ensure the company continues its progress. If profits increase, they share in those future gains. Our cash upfront is limited to the five-year valuation, and strong growth later means higher earn-out payments.
28/08/2025 So, at a 15% margin, you effectively pay six to seven times earnings for a five-year payback?
Yes.
28/08/2025 Anything above that becomes part of the earn-out?
Exactly. It varies depending on risk. If it is very stable, we may pay more upfront. If there are higher risks, we pay less upfront. No risk means more upfront.
28/08/2025 What is the typical structure between upfront and earn-out?
On average, we pay 60% to 70% upfront and 30% to 40% in earn-outs.
28/08/2025 Over how many years do you usually structure the earn-out?
Normally three years, sometimes two. We have only one example longer than that. We try to keep things simple and avoid too many different earn-out structures.
28/08/2025 Roughly what percentage of entrepreneurs leave after the earn-out period?
We usually discuss this before acquisition. Often, sellers want to reduce their involvement or pursue something else, so we plan to find new management within three years. Some continue part-time to maintain relationships and serve as cultural ambassadors, often joining the board. Others commit to five years before reassessing. A few retire immediately, in which case we work together to ensure a smooth management transition.
28/08/2025 Is there a correlation between company performance and whether the founder stays involved?
Yes, I believe so. I have not analyzed it in detail, but I would bet involvement reduces problems. Founders have relationships and knowledge not captured in manuals. An outsider, no matter how skilled, cannot replicate that immediately. That is why we acquire businesses that are simple to run and understand.
28/08/2025 How do you encourage sellers to train the next tier of management?
That is something we now look at more closely when acquiring companies. We check if there is a second level ready to take on responsibility. We also collect data from all subsidiaries in the same way, with consistent KPIs. Everyone can see trends and what is important to maintain a sustainable group. Success measurements are visible to everyone all the time.
28/08/2025 Hypothetically, if my UK company joined Teqnion, how would you measure performance?
We collect monthly P&L and balance sheet data from each subsidiary. CEOs also fill out a short monthly report focusing on key metrics: EBIT versus budget and last year, sales, order intake, backlog, gross margin, and net margin. A competent CEO can complete this in a few minutes, and we want them to know these numbers daily. We apply the same process across all companies.
28/08/2025 Do you track working capital as well?
Yes. CEOs report on inventory, and we use a collector sheet to present all KPIs with green flags where targets are met. We monitor earnings, margins, and trends over three to six months. We also track return on assets, excluding cash, since cash is continuously centralized.
28/08/2025 How often do you pull cash from subsidiaries?
There is no fixed schedule. We transfer cash when there is excess at a subsidiary or when we need it. We do not let cash sit unused.
28/08/2025 Reflecting on underperforming companies, how did you historically track performance?
We tracked in similar ways but with less structure. Previously, I did much of it myself with Excel. As the group grew, I was not good enough at ensuring others collected the same data. When I stepped back, I failed to implement proper systems, so trends were missed. Over the last year, we added safety measures to detect issues earlier and act faster. Now we correct problems quickly. It is simple, and I admit it is shameful we did not do it sooner.
28/08/2025 What was the mistake in your view? Was it linked to the CEO coaches?
From my perspective, yes. When people saw me interacting with subsidiary CEOs in a personal and supportive way, they may have mimicked that style instead of being data-driven. We lacked a structured framework, so the softer style became dominant. That may not be the whole truth, but I believe it is part of it.
28/08/2025 Were you too soft in your approach?
Can you be too soft? I am not sure. You can be friendly and nice while also being very firm about results. That balance is essential because our purpose is to make money. Otherwise, we should pursue something else. Both qualities can coexist.
28/08/2025 Did the company lose focus on results as it scaled?
Yes, I lost direct contact with individuals in subsidiaries. I was not effective enough in setting up safety nets to gather data, so we questioned performance too late.
28/08/2025 Maybe CEOs did not feel accountable without your direct touch?
Yes, that may be true, though I do not want to sound like it is the only reason. Many factors contributed to underperformance. Better systems and processes earlier would have improved outcomes.
28/08/2025 How do you evaluate the role and performance of a CEO coach?
If subsidiaries earn more than the prior year, the coach is doing well. If a struggling company turns around even without higher profit, that also counts. The real issue was my failure to create a stringent system for reporting and action. Now we have standardized KPIs, and problems trigger immediate responses and follow-up until resolved.
28/08/2025 Why did you implement a new structure in the UK?
We appointed Dave Barton as UK manager and CEO coach. He oversees all UK subsidiaries, ensures proper reporting, and delivers a complete monthly package to group management. We plan to replicate this in Sweden with 25 companies, using multiple coaches and a regional manager.
28/08/2025 Are CEO coaches full-time employees, and how are they compensated?
Yes, they are salaried and receive bonuses based on profit growth. They earn a percentage of increased earnings compared to the last three years, provided financial targets and free cash flow requirements are met.
28/08/2025 Why wasn’t Håkan involved earlier with the builders?
There is no simple answer. We were too slow to act, trusting others’ promises. Eventually, I asked him to step in, and he has done a great job since.
28/08/2025 So you were too lenient with that CEO?
Yes. Knowing the business well made it harder to stay uninvolved. With today’s systems, we would have acted earlier and saved money. Now we require explanations and corrective actions whenever KPIs go red, or we step in directly.
28/08/2025 Can CEO coaches also serve as subsidiary CEOs and board chairs?
Yes. Every subsidiary board includes someone from us, often a CEO coach, me, Daniel, or sometimes a previous owner. Boards are small, two or three people, focused on targets and strategy.
28/08/2025 Lifco CEOs also chair many boards. Can that scale?
Yes, but only with structured reporting. It is impossible to manage subsidiaries individually. Lifco, Addtech, and Lagercrantz have long had KPIs and reporting. It is straightforward: follow the system, execute, and keep rules simple.
28/08/2025 How do you balance decentralization with central guardrails?
We impose simple, universal rules. As long as subsidiaries keep metrics “green,” we do not interfere. If results turn “red,” we step in. This preserves entrepreneurship while ensuring accountability.
28/08/2025 What are the spending approval guardrails?
Investments of a few hundred thousand SEK must be budgeted in the fall and approved by the board. Unexpected spending, like a broken machine, is reviewed case by case. Nothing significant slips through.
28/08/2025 So budgets are signed off at Teqnion group level?
Yes. CEOs propose budgets, boards approve, and they roll into the Teqnion budget.
28/08/2025 Lifco claims they do not use budgets. How do you view that?
I agree with the spirit of not over-relying on budgets, but I think they are necessary. A CEO must control the P&L, scrutinize costs, and plan activity. A budget is a sanity check. Calling it something else does not remove the need.
28/08/2025 How do you think about training or finding new CEO coaches?
It is not a problem. Talented people reach out to us. We keep the head office small but can still attract strong candidates. As long as we strive to improve and appeal to ambitious young people, we will find them.
28/08/2025 How many CEO coaches do you have today?
We have one in the UK and two in Sweden, soon three with a new hire in September. Patrick now consults part-time, Anna-Karin and Håkan remain, Mona is leaving. In total, four coaches for 36 companies.
28/08/2025 How involved are you at subsidiary level now?
At the moment, too much. Normally not very involved, but currently I work closely with a handful of companies. Once the reorganization is complete, I should focus more on acquisitions with Daniel.
Competition
21/10/2022 How did Road Catering achieve growth and why did they sell to us?
That is a great question. Road Catering is very strong in design, keeping costs down, selling effectively, and listening to customer demands. Their product gives customers a lot of value for relatively little money, so they have all the ingredients to grow very large.
They sold because they realized they needed help taking the product worldwide. We were fortunate to find each other, and we are having fun doing this together.
13/02/2023 How is Techneon different from other Swedish and Nordic serial acquirers?
We are much smaller and earlier in our journey than peers like Lifco, Instalco, and others. We do not view them as competition. Instead, we see them as big brothers and sisters we can learn from, sometimes adopting what works, sometimes learning what not to do. There are so many acquisition opportunities available that we do not need to compete head-to-head.
The market is large. While we occasionally encounter peers when going through brokers, that is rare because we usually find our own opportunities. In those cases, target companies are seldom talking to more than one other buyer. This direct approach reduces competition.
13/02/2023 Have you noticed less competition from financial buyers compared to perpetual buyers?
Yes. We have never really competed with private equity since they target cases five or six times larger than ours. Among perpetual buyers, we have seen some slow down or even sell off companies. Competition has declined.
In 2021 and 2022, brokered deals often carried prices nearly double what we wanted to pay. Today, the gap is smaller, perhaps 50 percent, though still above our comfort zone. So while competition has eased, we still prefer sourcing opportunities ourselves. It is more effective and more fun.
06/05/2023 Why does Technium focus on acquiring industrial companies with physical products?
It is a conscious decision, but luck also plays a role. When Ulf and his best friend started the company, they took inspiration from several larger Swedish firms with similar models that had proven successful. Ulf is a mechanical engineer, so it was natural to begin with industries he understood well, machines, gears, and forces.
Over time, we could have shifted direction but chose not to, because we learned a lot from this space. Competition is one reason. Perfect markets exist in theory at school, not in reality. In practice, some industries are simply less attractive to most ambitious people. Talented engineers or programmers often want to build glamorous companies like Klarna or Spotify, where competition is extremely intense. By contrast, our industrial niches are less crowded, which creates meaningful advantages for us.
21/10/2023 Why are our margins lower compared to peers like Lagerklans, Adtech, Lifco, and Indotrade?
It is true that our margins are lower, but those peers have operated much longer and across larger, more diversified groups. That creates robustness we are still building toward. We are in the earlier stages, constantly working to improve margins, and we will not be satisfied until we are best in class.
We always aim to acquire companies with stronger margins to lift group performance, while also pushing subsidiaries to improve pricing and profitability. Compared with companies founded around the same time as us, our margins are actually slightly higher, so we see the long-term trajectory as positive.
19/02/2024 Why will Nubis not significantly impact 2024 results if margins are robust?
Nubis is small compared to the entire group. Even if it performs well, its contribution is limited. Ideally, it becomes an even smaller part by year-end as we continue acquisitions. Our model is to buy many smaller technology-driven companies, which collectively grow into something significant over time.
19/02/2024 Why will Nubis not significantly impact 2024 results if margins are robust?
Nubis is small compared to the entire group. Even if it performs well, its contribution is limited. Ideally, it becomes an even smaller part by year-end as we continue acquisitions. Our model is to buy many smaller technology-driven companies, which collectively grow into something significant over time.
23/04/2024 Are house building companies taking orders at very low margins?
Yes, in order to keep production going and retain employees, we take on nearly any project available. We are glad to have projects in the pipeline so we can keep the factories active during this difficult period.
When the economy turns and interest rates come down, construction activity in Sweden will accelerate rapidly. For now, however, the entire construction sector is experiencing a freeze, and this affects us as well.
23/04/2024 Despite declining sales in absolute terms, are subsidiaries gaining market share?
It varies. Some companies are growing in their niches, others are stable leaders in narrow segments, and some are in rougher times. The group is very diversified, so there is no single answer.
Defining the “market” is also tricky. Some subsidiaries operate in niches where they essentially are the market. Excluding house building, overall organic growth is not necessarily negative. On a high level, we may be slightly above GDP. Still, we do not focus on market share but on being very good in our niches, carving out positions that generate strong cash flow and profitability.
21/07/2024 Do you use AMETEK as a role model?
No, we do not. It is a great company, and I wish I had owned the stock ten years ago, but we are not modeling ourselves after them. Still, it is inspiring to look at what they have achieved, and we can certainly learn from strong companies like AMETEK.
21/10/2024 Does focus on U.K. acquisitions mean there is more competition in Sweden?
Yes, there has been strong competition in Sweden for a while, with multiples higher than we are willing to pay. Diversification is also strategic, we want to grow outside Sweden. U.K. and Ireland now account for about half of profit this quarter, despite being less than a quarter of the group by number.
17/02/2025 How many subsidiaries might not exist in twenty years due to disruption or market shifts?
We cannot predict an exact number, but when we evaluate acquisitions, we think decades ahead. We focus on businesses that sell crucial components to society and have the durability to remain relevant over the long term.
17/02/2025 How do you know recent acquisitions outperform because they are better, and not because the Technion model weakens companies over time?
Looking at cohorts of companies acquired over our 18-year history, the best performers are both the newest cohort and our first cohort. The weakest results are in the second and third cohorts. If the model systematically destroyed companies, then the oldest cohort would also be the weakest, but in fact many of those businesses are at all-time highs. This supports our belief that the model works and that struggles are isolated, not systemic.
23/04/2025 Are you noticing less competition in cyclical markets due to bankruptcies?
It is difficult to quantify because our companies operate in very specific niches. At a high level, I do think the number of competitors is somewhat lower. That said, those still operating are struggling, and some are reducing prices below levels we are comfortable with. So net effect, bankruptcies are not really helping us. They are not hurting either, but the overall impact is small.
Growth
21/10/2022 Do we risk over-specialization with acquisitions like Bell Coachworks?
Yes, I worry about it, but we assess whether each company is robust on its own. We want to see multiple niches within their niche, different offerings, and a diverse client base.
Bell Coachworks, for example, sells car transporters to used car dealers, but also to defense, high-end car makers, and racetracks. That variety makes them more resilient, which we always consider before acquiring.
21/10/2022 Why buy two UK companies amid record energy prices?
They are not very energy intensive. Bell uses some energy, but not excessively, and Reward Catering uses very little since only final assembly is in Ireland. Most production is outsourced abroad.
We never buy just for current conditions. We buy for the long term , 10 to 20 years ahead. If costs are higher now, that is reflected in the valuation. More cost means lower profit and therefore a lower valuation. These are solid companies with good people and good niches, and we believe in them long term.
21/10/2022 Of the 23 companies acquired, how many owners remain and how many became Technion shareholders?
Approximately half of them are still with us in some capacity, which we counted as 9.
As for how many became shareholders, I do not know the exact number. We pay in cash, and it is their private money to use as they choose. Hopefully, some reinvest and join our shareholder group.
13/02/2023 How will Techneon scale acquisitions to sustain growth above 15% EBITDA?
It highlights what we always focus on, which is scaling what we do. We are constantly learning because we have never run Techneon at today’s size before. Growth is in our DNA, and we must adapt continuously. It is a clever question, but I do not have a definitive answer since we have not done it yet. We will learn, iterate, and improve step by step, solving it as we go.
13/02/2023 Will you hire more people or pursue larger acquisitions to support scaling?
We have seen peers solve it in different ways, such as hiring more M&A staff or increasing deal size. Right now, we do not feel the need to solve it today, but of course, we must address it eventually. Our approach is always to iterate toward what feels right for us. We will solve it in baby steps, just as we always do.
13/02/2023 What are your thoughts on expanding into vertical software businesses?
We try to keep things simple and focus on areas we understand. We have built deep practice in the types of companies we own today. While the future is uncertain, we stick to businesses we can develop confidently. We are always learning and reevaluating, but for now, our focus remains on physical product companies.
Our competence base is another factor. We are a very small head office of seven people, and none of us are vertical market software or AI experts. If that changes, our scope might broaden, but not in the near term since our current model is working well.
13/02/2023 How large is the Swedish M&A market, and are there more opportunities abroad?
We began looking abroad about 12 months ago. There are plenty of opportunities both inside and outside Sweden. Our pipeline is deep and exciting, and it feels like we have many years of work ahead.
Even without analyzing Sweden’s total addressable market, we believe we could meet our targets for decades if we only stayed domestic. Still, we already acquired companies in Ireland and Great Britain. Our focus is currently on the UK, Ireland, and the Nordic region, rather than further into continental Europe. We want to plant flagpoles in regions we already know.
13/02/2023 How has the acquisition process changed since Daniel joined?
The fundamentals are the same, but speed, drive, and efficiency have improved. Daniel is a strong leader in acquisitions, and together we now meet over 100 companies per year. We value and approach entrepreneurs the same way as before, but we do it more often and with greater energy.
It is also much more enjoyable working as a team. Meeting entrepreneurs alone was rewarding, but doing it together brings more dynamics, better debriefs, and more fun.
13/02/2023 What percentage of growth will come from organic growth long term?
Historically, large peers with over 100 companies have achieved single-digit organic growth, often around 5%. That has always been my expectation for Techneon as well in the long run. However, since we are still small with about 20 companies, our organic growth has recently been stronger. Over time, I expect it will normalize closer to single-digit levels.
20/04/2023 What is your view on organic growth of subsidiaries?
Organic growth is always needed over time. We try to encourage each subsidiary to focus on improving quality and profitability at their current level before stepping up to a new size. If a company focuses on earning more money and fixing what needs to be fixed first, then growth in sales will naturally follow. A healthy company grows organically, and that is always our goal.
We also expect all subsidiaries to pursue some level of organic growth because without it they risk diminishing over time. Some can grow very efficiently with low risk, while others cannot. In those cases, we are happy to take the strong cash flow they generate and reinvest it into acquiring new high-quality companies.
20/04/2023 What is your view on dividends versus growth?
We love growth. While it is ultimately up to the AGM and shareholders to decide, those of us running the company prefer to reinvest all cash flow into new businesses. That is what we live for.
As long as we continue to find great opportunities, we will prioritize reinvestment in growth over dividends.
20/04/2023 Do you have recurring revenue opportunities in physical goods and services?
Yes. In several industrial niches we sell physical products, but in some cases we also provide recurring service work. For example, one subsidiary works exclusively with engine servicing. In others, we provide updates and ongoing maintenance to keep systems functional and reliable. Some subsidiaries have significant recurring service revenues while others have none, which adds to our diversification.
Even with one-off products, many of our companies have built decades-long customer relationships. As long as we deliver quality and good service, customers continue to buy. We place strong emphasis on long-term relationships with both customers and suppliers, building sustainable businesses where all parties benefit over time.
21/10/2023 Can you split revenue growth into organic, M&A, divestments, and special items?
This quarter organic growth was close to zero given the tough economic environment. Over time, growth has split roughly fifty-fifty between organic and M&A, which is also where we expect to land long term, similar to our peers.
We do not do divestments, and foreign exchange or special items play no meaningful role in our results.
19/02/2024 Do you see AI as a megatrend and opportunity for your companies?
The listed companies benefit more from broader societal and energy transitions, particularly towards electricity. The only AI connection might be here at Nubis, which designs enclosures for server racks that improve cooling efficiency. That could be relevant for AI servers, but it is not why we invested.
Our approach is to find companies in niches with products that remain relevant long term. We try not to be swayed by whatever is the hottest headline in the Financial Times.
19/02/2024 Will Technion move up in size and quality of acquisitions?
Yes. We are paying more today because we are targeting more profitable, higher-quality companies. We want niche businesses with strong brands and sustainable earnings. The average size of acquisitions has grown, but we do not necessarily need significantly larger headcount or revenue.
19/02/2024 Could organic revenue decline lead to margin decline?
It depends on the timeframe. Sometimes reducing sales is necessary if it means letting go of low-margin products or customers to focus on more profitable business. Over time, we want subsidiaries to grow with sustainable or higher margins.
Our focus is on cash flow and profit. Revenue is a means to that end, not the end itself. Sustained organic decline is not our target, but profitability and cash flow take priority.
19/02/2024 Do you see AI as a megatrend and opportunity for your companies?
The listed companies benefit more from broader societal and energy transitions, particularly towards electricity. The only AI connection might be here at Nubis, which designs enclosures for server racks that improve cooling efficiency. That could be relevant for AI servers, but it is not why we invested.
Our approach is to find companies in niches with products that remain relevant long term. We try not to be swayed by whatever is the hottest headline in the Financial Times.
19/02/2024 Will Technion move up in size and quality of acquisitions?
Yes. We are paying more today because we are targeting more profitable, higher-quality companies. We want niche businesses with strong brands and sustainable earnings. The average size of acquisitions has grown, but we do not necessarily need significantly larger headcount or revenue.
19/02/2024 Could organic revenue decline lead to margin decline?
It depends on the timeframe. Sometimes reducing sales is necessary if it means letting go of low-margin products or customers to focus on more profitable business. Over time, we want subsidiaries to grow with sustainable or higher margins.
Our focus is on cash flow and profit. Revenue is a means to that end, not the end itself. Sustained organic decline is not our target, but profitability and cash flow take priority.
19/02/2024 What is the long-term goal for organic growth under normal conditions?
In normal market conditions, we expect single-digit organic growth. That is based on historical comparisons and industry benchmarks.
23/04/2024 Is weaker organic growth mainly due to the housing business?
Partly, yes. The housing business contributes, but the broader economy is also slowing, and many segments are affected. At the same time, we are coming down from unusually high sales levels during the pandemic, which inflated order intake across the group.
It does not mean that all companies are struggling. The environment is simply less heated than it was a year or two ago. Still, housing is clearly one part of the negative organic change.
21/07/2024 Why has organic growth fluctuated from -8% in Q4, -1.5% in Q1, and -6% now?
I see the figures, but I don’t interpret them as an operational trend. The reality is that we are in a tougher market and have been for about a year. Selling at the margins we want is more difficult across many markets. That is not a reflection of weak performance from our teams, but rather the environment we are operating in. We have flagged this possibility in our letters and quarterly reports for some time, and now it is here. We will fight through it as we always do.
Because we are still a relatively small company, fluctuations appear larger quarter to quarter. A single product-based company landing or missing a big project can move organic growth by several percentage points. Minus figures are of course not good and we take them seriously, but -6% versus -1.5% is not a structural trend as much as operational noise. That said, I want to emphasize that I am not happy with the result and we must improve.
21/07/2024 Do you plan to expand into another country?
Yes, but we will not disclose which country now, since plans can change. We continuously evaluate opportunities while focusing on risk-adjusted capital allocation. Some ideas inspire us even if we do not act on them. The priority remains strengthening what works, while staying open to new opportunities.
21/10/2024 How would you describe your M&A market and runway?
Daniel leads the search, and we are very selective. We meet about 200 companies per year, with me seeing perhaps 100 of them. We look for businesses that will stay relevant for decades, with high margins, high return on capital, and their own products or brands so they control their future. They must also be good at converting earnings into cash. We want resilient models we can clearly understand, with strong people running them.
Unlike some serial acquirers who use vertical labels, we don’t organize that way. Our subsidiaries work independently, so vertical names would only be a facade. The market we address is much larger than where we are today, essentially industrial B2B companies sized by geography and scale. Our circle of competence expands as we meet hundreds of companies each year, and the M&A pipeline looks very strong. Some of our best deals came from unexpected places, like our recent U.K. acquisition, which impressed us once we engaged with the team.
21/10/2024 What are your initial reflections on acquisitions in the U.K. compared to Sweden?
Our first impression was that entrepreneurs and good people in England are just as strong as in Sweden. Running a profitable small business requires the same skill set and personality everywhere. We are very happy to be in the U.K., and there is still so much more to do. The opportunities and number of great entrepreneurs there make it very exciting.
21/10/2024 As Technion grows, will you need help sourcing acquisitions?
Yes. Daniel leads the effort and pulls me in where I can add value. We also have a new colleague, Yonathan, who has started to take a role in sourcing. As we grow, we will scale this part of the business just like any other area. We may also improve efficiency with some methods that don’t require many new hires.
17/02/2025 If I invest savings in Technion for 20 years, what should I expect?
Our intention is to deliver returns above our financial targets. Looking at other successful serial acquirers, the model can compound strongly over time, though we do not aim to copy anyone directly. Currently, we are focused on two geographies, but in the future we may strategically expand to more. The vision is to build a stronger, more diversified, and more robust group over decades.
23/04/2025 With the five acquisitions in 2025 adding 10.7% of sales, what ambition do you have for organic and inorganic growth, and what margin recovery could be expected?
It is not only me working on improvement projects. We have a strong team, and coworkers in the subsidiaries themselves are doing a tremendous job. The way we see theoretical growth going forward is around 10% from acquisitions and single-digit percentages in organic growth in a normal market. Together, that gives us the 15% annual growth we are aiming for.
Also, when we report sales numbers for acquired companies, we use an average of the last three years, not pro forma or last-year revenue. Since most of these companies are growing, historical averages are usually lower than current figures.
23/04/2025 You have completed six acquisitions this year. Are there more in the pipeline?
Yes, we always have acquisitions in the pipeline, some closer and some further away. Since 2020, our target has been around five companies per year. Some years we have done fewer, this year more, but five remains a reasonable long-term average.
At the moment, we are tuned to about five acquisitions annually, but in five years we may acquire more and larger companies as our position strengthens. Our long-term financial target is to at least double earnings per share over a five-year period. That means roughly 10% growth from acquisitions and 5% from organic growth each year. Over time, what we consider a “big” acquisition has changed. A company making 5 million Swedish kronor was once large for us. Now we look at companies generating at least 10 million kronor, and that threshold will likely keep rising.
23/04/2025 Why pursue many small acquisitions, given risks such as succession and customer concentration?
This is a fair question. But even well-regarded serial acquirers, like Lifeco or Lloyd Jones, started with smaller acquisitions. In fact, some of them still acquire businesses of the same size as we do. We have confidence because our process is structured to manage these risks. Over time, as we grow, we will naturally pursue larger transactions, but we do not see smaller acquisitions as inherently riskier when handled with discipline.
23/04/2025 Of the struggling cohort two and three companies, what sectors are they in?
The largest losses are in homebuilders and contract manufacturers. In addition, there are companies supplying Sweden’s heavy industry, which has faced very tough conditions. Despite ongoing improvements, the broader economic environment remains a strong headwind.
23/04/2025 Why did you buy homebuilders despite their crisis history?
The decision was based on confidence in the people who built and led the company. They had shown strong ability in both good and bad markets. When a downturn came, they were no longer operational. After reinstating one of the original founders, the business quickly became profitable again, even in the current tough environment.
That said, the lesson is clear: we should avoid companies that require exceptional, almost “magician-level” management just to survive downturns. A normal manager should be able to operate successfully. In this case, I underestimated the specialized skills required, which made the investment more vulnerable than expected.
21/07/2025 How do you define organic growth, and when is an acquisition included in results?
Organic growth begins in the thirteenth month after acquisition, when there is a comparable month from the prior year. An acquisition is included in the income statement once control is achieved, that means the deal is signed, completed, and funds or shares are transferred. For simplicity, accounting starts on the first day closest to completion, which is usually the press release date.
28/08/2025 How would you describe your role in the first 15 years?
In the first three to four years, I acted as interim CEO in different subsidiaries. I worked mainly on increasing sales activities, making organizations more effective, meeting more customers, selling more products, and expanding geographical reach.
Fiancials
21/10/2022 Is it going to be a good report tomorrow?
It's a good looking report. We are not happy with the margins or the cash flow. Everything is okay, but we will fix those issues. I was hoping we were better than this, but to be fair, we will probably never be fully satisfied. It is a long run.
Right now, for every share of Technion you own, you also own DKK 15 of inventory, wheelchairs, steel, wood, transformers, and so on. We are working on that.
21/10/2022 What are Bell and Reward’s contributions to sales and EBITDA this quarter?
We do not disclose ongoing figures for daughter companies. As always, we share what the companies were making when we partnered with them.
Both Bell and Reward are performing as expected.
21/10/2022 How do you view current inventory levels and receivables? Any problems?
Historically, we have had no issues getting paid, and we expect that to continue. Regarding inventory, we have been a bit too sloppy in trimming levels. It is nicer to have stock ready for customers, and COVID logistics made it harder to stay disciplined.
We are actively addressing this, though it will take time. Our inventories are not perishable, so we should sell them, though not always within a month. On receivables, we see no bad debts that we do not expect to collect.
13/02/2023 Will you add a return on capital metric instead of EBITDA margin in goals?
We excluded the KPI for working capital, but we have discussed introducing another working capital KPI. We prefer to keep it simple, focusing on inventories, trade payables, and trade receivables. Each company should monitor these carefully. Since last quarter, we reduced working capital mainly by lowering trade receivables and inventories in some companies. It is continuous work that we will keep doing.
13/02/2023 Why do you still use EBITDA if you joke about it in interviews?
We do not put EBITDA on the first page of our reports; it appears much later. We mainly use it in the net debt-to-EBITDA ratio, which is an important KPI for lenders. Banks track it closely when evaluating credit.
Operationally, EBITDA is still a useful measure. We need some way to follow the performance of our businesses, and EBITDA remains one of those indicators. While we may joke about it lightly, it still has relevance in both financing and operations.
20/04/2023 Why did margins decrease in 2022 despite acquisitions with higher margins?
The acquired companies’ operating margins were strong, but EBITDA at group level includes more than operations. In 2021, for example, a bargain purchase boosted EBITDA positively. We do not like to focus on adjustments, but it is important to note these revaluations affect reported margins.
In 2022, inflation, higher interest rates, and price pressures made maintaining margins difficult. Our teams worked very hard to manage costs, and overall we handled it well. Over time, as we grow and the impact of these accounting components becomes smaller, our ambition is for overall EBITDA margin to increase.
20/04/2023 How are you managing inventory levels and cash flow this quarter?
Inventory levels are about the same as year-end, but accounts receivable increased since more deliveries came at the end of the quarter. That is not necessarily negative, it simply reflects timing.
Cash remains our raw material, and we emphasize to all teams the importance of keeping it front of mind every day. We love cash and want to maintain strong liquidity.
06/05/2023 Are Technium’s maintenance capital expenditures roughly equal to depreciation, and how do you define owner’s earnings?
Yes, maintenance capital expenditures are roughly in line with depreciation. Over time, inflation makes new investments more expensive, so accounting depreciation may slightly understate reality in nominal terms. But overall it is a reasonable proxy. We favor simple, capital-light businesses with little need for machinery. The best cases are when production is outsourced and cash flow can be used to acquire new companies instead of new equipment. For us, owner’s earnings often align closely with reported earnings, since capex needs are minimal.
06/05/2023 How do you define “profit” in internal reporting, and why do you target EBITDA instead of EBIT?
When I say profit, I mean real profit, earnings after tax with no adjustments. We avoid adjusted numbers. If you cannot buy bread with an adjusted figure, it is not real money. We want profit after tax to be as close as possible to cash flow. For internal reporting, we often look at earnings before tax for simplicity, since some subsidiaries do not book taxes monthly.
Regarding EBITDA, we set a target of at least nine percent. This is a simple way to think about value creation and capture. At the subsidiary level, amortization of intangibles comes only from group accounting, not operations. Interest and taxes are also outside management’s control. EBITDA strips those out, giving a clearer picture of operational performance and its tie to cash flow. It is not perfect, but it helps us stay focused on what our companies can truly influence.
14/09/2023 How do you think about valuing Technion as a business, compared to how investors might value Berkshire Hathaway?
I will not give you a stock price with decimals, but I can explain the approach. For Berkshire, people often look at net cash, the equity portfolio, and then operating earnings from businesses like energy and railroads. Sometimes they go deeper into each unit, adjusting for seasonality or structure.
For Technion, the approach is similar in principle. You start with the balance sheet, then examine the cash flow and earnings of the operating companies, and layer in the acquisitions. The details differ because we are structured as a serial acquirer of small industrial companies rather than a conglomerate with a few massive units, but the valuation mindset is comparable, break it down into assets, cash flows, and earning power.
14/09/2023 How should investors broadly approach valuing Technion as a group of subsidiaries?
It is tricky, and I do not have a single answer. One way is relative pricing: compare us to similar companies and look at EV/EBIT or whichever ratio you prefer. The challenge is that all serial acquirers could be mispriced together, and picking the right peers is not straightforward, some trade at PE 8, others at PE 100.
Another way is a discounted cash flow (DCF). The difficulty there is that, if I do my job right, we will reinvest nearly all operating cash flow into acquisitions for years, leaving little free cash flow visible in the short term. Eventually, operating cash flow should exceed what we can redeploy, but predicting when that happens is very difficult. Terminal value assumptions also matter enormously. Small changes in growth rates can swing the value significantly, especially for serial acquirers that can sustain growth longer than normal companies.
A practical approach may be to start with the returns on capital of our existing subsidiaries, which are visible in our accounts. That gives you a baseline “going concern” valuation. Then, add a premium or discount based on your view of our future capital allocation, whether we can continue acquiring well at reasonable multiples or risk destroying value. It is similar to how Berkshire was often valued historically, using book value plus a premium for Buffett’s skill. For us, the premium or discount reflects confidence in our reinvestment discipline.
14/09/2023 Why is valuing a company like Technion especially difficult for investors?
Valuation is never static. Interest rates move, assets grow, dilution changes the base, and accounting treatments differ across companies, such as goodwill amortization versus direct expense recognition. These choices affect comparability.
Ultimately, valuation is less about precise numbers and more about what the numbers mean. Investors often look at return on invested capital and extrapolate forward, then apply an expected multiple. But the outcome varies enormously depending on the assumed compounding period. If you believe we can compound at 23% for 20 years, you reach a very different number than if you assume only 10 years. The exercise is useful for framing possibilities, but it is highly sensitive to assumptions. That is why we avoid putting out exact figures, it is more about understanding the drivers than producing decimal-point precision.
21/10/2023 What is the difference between raw material and merchandise in the P&L?
It depends on the type of company. Some subsidiaries buy raw material, process it, and produce finished or semi-finished products. Others are essentially resellers: they buy products, add competence, networks, or applications, and then resell without physically altering them.
The former goes into raw material, while the latter is classified as merchandise.
21/10/2023 Why has some debt moved to current liabilities since December last year?
This is due to loan renegotiations with our bank. We are finalizing updated terms, so the shift to current liabilities is temporary.
21/10/2023 How do you feel about the company’s cash position?
We feel good. We raised a significant amount of money in July and August, and we now have new debt financing in place with favorable terms.
19/02/2024 Why was the 2021 20%+ return on equity target removed, and can Technion sustain it over the next decade?
We updated our financial targets about three years ago to better reflect how we think and what we aim for. Today we use stability, margin, and earnings-per-share targets. Over time these should be equivalent to the old ROE goal, but they provide a clearer structure for how we operate and plan.
19/02/2024 Are receivable impairments and bankruptcies unique to homebuilders?
No, unfortunately not. This fall we had a large industrial customer bankruptcy that cost us nearly SEK 1,000,000, plus two major Swedish housebuilders also failed. Construction is particularly challenged right now, but cash flow pressures exist across many industries. We remain alert to minimize further issues.
19/02/2024 Why was the 2021 20%+ return on equity target removed, and can Technion sustain it over the next decade?
We updated our financial targets about three years ago to better reflect how we think and what we aim for. Today we use stability, margin, and earnings-per-share targets. Over time these should be equivalent to the old ROE goal, but they provide a clearer structure for how we operate and plan.
19/02/2024 Are receivable impairments and bankruptcies unique to homebuilders?
No, unfortunately not. This fall we had a large industrial customer bankruptcy that cost us nearly SEK 1,000,000, plus two major Swedish housebuilders also failed. Construction is particularly challenged right now, but cash flow pressures exist across many industries. We remain alert to minimize further issues.
19/02/2024 Why does Technion allocate more to goodwill than intangibles in acquisitions, and is goodwill tax deductible?
Goodwill arises when we pay more than the tangible assets are worth, which is almost always the case when acquiring strong companies. Under IFRS we test it annually to confirm it can be defended. It is not tax deductible.
We use a process accepted by law and standards that gives a good view of our business. We do not spend much time comparing to other acquirers’ methods, as this approach works for us.
19/02/2024 How will you better protect against bad debt after the SEK 3.8 million impact this quarter?
We already have routines in place, but the current economy is more risky than normal. We need to stay extra alert, make additional calls, and double-check anything unusual.
The best defense is strong upfront cash flow and high margins, which create a cushion if problems occur. We encourage CEOs to secure more upfront payments to protect against unexpected events.
23/04/2024 Why don't you record more intangibles instead of goodwill for tax and cash flow benefits?
Because the group itself is not a tax subject, goodwill arises only at the group level, not the holding company, which is the tax subject. Therefore, neither goodwill nor other intangibles affect tax. Johan has already written extensively about this in the CEO letter, and we will not repeat that here.
23/04/2024 Why are accounts receivable up so much? Are customers struggling to pay, and in which industries?
We have 28 entities, so it is difficult to discuss individuals, but overall sales have been strong across the group. We do not expect any bad receivables; it is normal operations.
There are fluctuations on a quarterly basis, even more so monthly. In March, sales were higher than usual, which explains the increase in receivables. We expect these receivables to translate into cash this month.
23/04/2024 Which P&L lines reflect the three IFRS accounting effects discussed on your whiteboard?
Foreign exchange effects on the balance sheet are booked under financial costs, so that line includes more than just interest expense. The revaluation of earnouts is booked in other operational costs, which sits above EBIT.
Because of accounting rules, these items impact both EBIT and EBITDA even though they are not driven by operations. This is why they can distort the financial picture during a given quarter or year.
23/04/2024 If housing companies are excluded, how have group margins evolved?
Margins would go up, but we prefer not to comment on specific subsidiaries. Some segments will struggle at certain times, and others will struggle years later. The strength of Technion is that the group as a whole remains robust through cycles. Our responsibility is to ensure each company performs as well as possible at any given time.
Looking across long-term serial acquirers, EBIT margins tend to rise the longer companies are part of the group. We see the same in our own portfolio, though it does not happen quarter by quarter. Over time, we are following that same upward trajectory, and we like it very much.
21/07/2024 Why did other operating income swing from negative to positive this quarter?
This line moves because many of our earnings come from companies acquired in the last five years, and those have quarterly earn-out payments. We must reevaluate these obligations against forecasts set two or three years ago. Sometimes this creates a negative impact, as in the last quarter when it was about negative SEK 12 million, and sometimes it is positive, as it was this quarter. Four companies were reevaluated, with three requiring lower payouts than expected and one higher, leading to a net positive result.
The rules require conservative reservation of future payments, so the line fluctuates with performance versus forecasts. None of these adjustments have cash impact until payout, but accounting standards force us to recognize them. Performance never exactly matches forecasts, so the line will continue to fluctuate. We aim to improve how we present this so it is clearer, but the accounting treatment itself is beyond our control.
21/07/2024 Can you comment on working capital performance, including receivables progress and higher payables?
We strengthened our team this spring and changed how we address working capital. We now look at each subsidiary individually, identify where improvements are needed, and then form a small task force with local management and sometimes one of our CEO coaches. Together we create an action plan that can be implemented quickly, usually over one to three cycles. This approach has already delivered progress on receivables.
With more expertise at the center, we can provide better operational support to subsidiaries. While our first tool is always to inspire and discuss strategy, when local management lacks the tools or resources we are now more hands-on. This way we help them execute improvements directly rather than leaving it entirely up to them.
21/07/2024 When do you expect significant improvement in free cash flow, and are there cash flow incentives in business units?
For the first time this year, cash flow has been added into incentives. We rarely improve in leaps, but we are working constantly to strengthen cash flow. A few subsidiaries are clear targets for improvement, and we expect progress within one to two years. Strong cash flow is critical, as it allows us to reinvest in new acquisitions while locking up as little capital as possible.
21/07/2024 Why did profit after taxes rise, but EPS fall by 1%?
Last summer, we issued new shares, so profits are now divided across more shareholders. That diluted EPS slightly, even though profit after taxes increased.
21/07/2024 Can you share year-on-year sales performance of the bottom three businesses
I would rather not.
21/07/2024 Roughly how much revenue comes from struggling companies, and what about the highest organic growth performers?
Very roughly, about 10% of the group struggles at any given time. At present it is more, as the market environment is difficult. On the other hand, some companies are temporarily boosted by strong market trends, such as electrification or defense, which are enjoying high demand. These will not last forever, but they are meaningful right now. This diversification means the group’s slowdown is less severe than if we were concentrated in only a few industries.
21/07/2024 Are any companies acquired since Daniel joined struggling, and what are you doing about them?
We acquire better companies now because we have more experience and financial strength. Still, mistakes happen, and even the best companies can face challenges if markets or people change. Every company has a life cycle. Our job is to balance those risks, support management, and keep a long-term perspective. Taken as a group, the acquisitions of the last three to five years have performed at or slightly above expectations, with the goal of recovering investment within five years. Within that mix, some companies lose money, but more perform above plan.
21/10/2024 Should EPS growth or free cash flow per share be the financial target?
We have a five-year target where, over time, earnings per share and free cash flow per share should be very similar. Free cash flow fluctuates more, while earnings are simpler and more stable for accounting reasons. Using EPS growth as a target reduces complexity and avoids short-term distortions, such as withholding employee payments to improve cash flow. Our financial targets together imply the required free cash flow levels.
21/10/2024 How do you manage leverage, given net debt/EBITDA increased from 0.5 to 1.2?
Our financial target is to keep net debt/EBITDA below 2.5, and we prefer some margin below that. We feel comfortable at current levels and will continue to use leverage as a value creation tool. Typically, we fund acquisitions with about 50% cash and 50% bank financing. The balance sheet remains strong, and we are comfortable continuing this way. Principal repayments and EBITDA growth should reduce leverage over time, even as we keep acquiring.
21/10/2024 Why have margins compressed from 11.7% to 10.9%, and how will you improve them?
Some struggling companies are dragging the group down. Our focus is to make sure every company earns money. Especially in small companies, performance comes down to people. When things go wrong, we feel it deeply, and that pressure also drives us to improve. We want our people to care the same way. Not to feel bad, but to feel enough urgency to act. Margins will recover by making underperforming companies profitable again.
21/10/2024 Do you have a minimum target for return on equity, given you reported 20.4%?
No official target beyond our financial goals, but we view 20.4% as not adequate. We expect better.
21/10/2024 Why is free cash flow before acquisitions lower than last year?
Several reasons: more capital tied up in inventory and receivables, higher interest costs, and a few companies dragging performance. It has not been good enough overall, and it is not uniform across the group. Some companies have been underperforming for several quarters, affecting cash flow momentum.
17/02/2025 Which one-off costs did you have during the quarter, such as relocation or restructuring expenses?
We had restructuring costs during the last quarter of 2024. Some are straightforward to calculate, but others stem from major changes within subsidiaries, which created turbulence in those organizations. Because it is difficult to pinpoint an exact figure, we decided not to present a fixed number. That said, part of our weaker performance comes from absorbing substantial restructuring costs.
17/02/2025 How is the new credit facility better than the previous one?
It is more flexible, slightly larger, and carries lower interest rates. Together, those features provide a stronger and more cost-effective financing solution.
23/04/2025 Are the 20%+ EBITDA margins from 2025 acquisitions sustainable, or driven by one-offs?
We believe they are sustainable, without making promises. In our Q3 report, we showed that international companies, all acquired in the past three to four years, have EBIT margins above 20%. Swedish companies, however, have much lower margins. We constantly look at acquisitions that are better than our average, which means sustainably higher margins.
As for the same-store EBITDA margin of around 7%, which is below target, the issue is not only the -3% organic growth but also underperformance in certain companies, especially in Sweden, where some have been losing money. We do see underlying progress. For example, one of our larger house-building companies is now profitable after re-engaging its original entrepreneur, proving that the right leadership makes a difference. Still, we cannot rely on extraordinary managers just to break even. The margin is too low mainly because some companies are losing money.
We also want to stress that many Swedish subsidiaries do have healthy margins. It is a smaller number of loss-making companies that drag down the overall figures, and that is where we are focusing our efforts to stop the bleeding.
23/04/2025 What explains the decrease in return on equity?
Our profits have declined while our equity base has not. The solution is to improve profitability, which will bring return on equity back to acceptable levels. At present, it is too low.
23/04/2025 Why is backlog down year-on-year?
Currency effects play a role, as the Swedish krona has appreciated, reducing backlog values by around 10%. However, more importantly, aggregated backlog is heavily influenced by a few companies with long backlogs and low margins, such as contract manufacturers and a housing company. Some of our best-performing businesses operate with little or no backlog, so group-level numbers can be misleading. We monitor backlog at the subsidiary level, which provides a clearer view of performance.
23/04/2025 How much impact did USD transactions have, as mentioned in the report?
We had a large trade where we bought equipment in the US and sold in Swedish kronor. When we purchased, the dollar was expensive, and when we sold, it had weakened. Since it was already a low-margin business, the currency move meant we lost a significant amount of money, which was painful.
23/04/2025 Can you explain the 7.8 million reclassification in note 4 of the annual report, and does it mean post-2021 acquisitions underperformed?
Accounting rules require conservatism, and entrepreneurs selling businesses are often optimistic in their forecasts. Since we are new to those businesses, it is difficult to reject their assumptions outright without damaging the relationship. We structure acquisitions with earn-outs: if performance meets forecasts, sellers receive more, and we also gain higher profits. If performance is lower, earn-outs are reduced.
Estimating these outcomes is more art than science, so we prefer to reserve too much rather than too little. Over the past five years, our acquisitions have generally performed in line with our own forecasts, though not always with the sellers’ higher expectations. Importantly, the earn-out structures mean that even if entrepreneurial forecasts are not met, our valuations and payback periods remain intact.
23/04/2025 What is the breakdown of Swedish versus international business?
At present, Swedish and international businesses contribute approximately equal earnings. However, international subsidiaries tend to have significantly higher margins, even though sales volumes are lower.
21/07/2025 How do you assess quality of increased inventories and receivables to ensure cash collection?
Free cash flow excluding acquisitions was very low this quarter, which we are not happy about. Inventory levels rose as sales increased toward the end of the quarter, but we are confident the companies involved will sell those inventories and translate them into profit and cash flow later this year. For trade receivables, about half has already hit our bank account, and we are confident the remainder will be collected this quarter.
We pushed very hard to increase order intake, which naturally tied up more working capital. It is not ideal, but it is a natural effect of driving growth.
21/07/2025 Why has free cash flow deteriorated, and what is the outlook
We are driving sales activities aggressively, which naturally ties up working capital and hurts free cash flow temporarily. Staying close to customers has increased sales, but receivables and inventories weigh on cash flow in the short term.
Long term, incentives are aligned for subsidiary CEOs and for us. Free cash flow must be high, as bonuses depend on it. We have the tools at multiple levels to ensure it improves and remains a core focus.
28/08/2025 Do you track working capital as well?
Yes. CEOs report on inventory, and we use a collector sheet to present all KPIs with green flags where targets are met. We monitor earnings, margins, and trends over three to six months. We also track return on assets, excluding cash, since cash is continuously centralized.
Outlook & Guidance
21/10/2022 Do you see reduced demand in cyclical businesses like construction and industry?
We try to be quick and scalable both up and down. We already see decreased demand in house building companies, so we are shifting focus to schools and public buildings. That will be a struggle, but we are adapting.
Across the rest of the group, demand looks strong. Our focus now is to increase margins and cash flow. Our order stock is robust, and our priority is turning that into profitable, cash-generating growth.
21/10/2022 Is there a risk construction companies get worse before they improve? Do we have fixed-price orders?
Yes, there is a risk. The entire construction industry will likely struggle for at least the next year. Our companies are primarily house builders with factories producing houses rather than site assemblers.
With professional customers, who are the majority, we work closely on costs and margins and adjust pricing where possible. With private clients, flexibility is limited, so there is more risk.
13/02/2023 Which businesses inside Techneon will benefit most in a recession?
Companies tied to electrification, such as Inyab, are positioned well. They produce transformers and related systems, and demand is strong as society accelerates electrification. They have been solid performers for more than a decade and now benefit from even greater momentum.
Valmec Tools is also set to do well, as maintaining and repairing vehicles becomes more important when fewer new vehicles are purchased. We recently opened a small project in the U.S. to expand sales and marketing there, and Valmec sees significant potential in that market. Additionally, two of our companies are exposed to the defense industry, which tends to operate on its own cycle and is less affected by recessions.
13/02/2023 What is your view on organic growth in recession versus non-recession periods, and price versus volume?
It is extremely hard to answer because it depends on which niches a recession hits hardest and how diversified we are. I am pessimistic about the global economy but optimistic about our resilience. We have proven it before. Our subsidiaries work hard and always aim to earn money, regardless of the environment.
On price versus volume, we cannot give an exact breakdown. What we look for in acquisitions is untapped pricing power. That does not always mean raising all prices but becoming more sophisticated about pricing. Over time, this approach has expanded gross margins across our long-held companies.
20/04/2023 Are AFSWarden’s article estimates in line with your expectations?
We do not provide forecasts, but we do have financial targets. The key one, and the most fun to aim for, is to double earnings per share every five years. That is what we work toward.
06/05/2023 What are your long-term earnings per share targets?
We aim to at least double our earnings per share every five years. That roughly equals 15 percent annually, but we make an important distinction. Our focus is always on the long term, and we want shareholders to do the same. We never want to chase a number in a single year by making a poor deal just to hit a target.
So far, we have actually doubled earnings much quicker than every five years. Still, our financial targets are designed to remain in place indefinitely. Today it is easier to double than it might be in 20 or 50 years, but our ambition is to keep delivering sustainable growth in earnings per share well into the very long run.
06/05/2023 Do you have an end goal for how large Technium should become?
I like the phrase “chasing Berkshire with friends” because it captures our mindset. We are not motivated by salary but by building something meaningful, fun, and long-term. There is no hard end goal, like reaching a certain level of profit. We just want to keep getting better each year and compounding value for shareholders.
The “1000x” idea came from simple math. When I joined in 2021, our market cap was about 1 billion SEK. If we can compound earnings at 15 percent annually, we double every five years. Over 50 years, that is 1000x. It is not a forecast, but it shows the power of compounding if we stay disciplined and consistent for decades.
14/09/2023 How should investors think about valuing Technion over time?
Valuation depends heavily on time horizon. In the short term, multiples matter most, and I adices generally follow earnings per share growth. That is why in our reports we show both EPS and share price on the same slide. We hope that over time they will correlate.
For very long-term compounding, runway is critical. If a company can compound earnings for decades, even buying at a high multiple can work. The challenge for Technion is that we are small with a shorter track record than companies like Constellation. That gives us more growth potential but less certainty. Ultimately, valuation for us is about expected returns on invested capital, the duration of compounding, and the multiple applied at exit. Small shifts in those assumptions change the outcome a lot.
14/09/2023 Are you personally a long-term investor, and how do you think about Technion’s long-term goals?
I try to be, but it is important to be honest. I have held Berkshire and Investor for over a decade, but most other stocks I have sold within a few years for various reasons. It is easy to say you are “long term,” but five years is already a long stretch if multiples contract while earnings double. You could see no stock price movement despite real business progress.
At Technion, our goal is to double EPS every five years, hopefully a bit faster. Over decades, that compounding engine is what drives returns. But along the way, valuation multiples will fluctuate, and that creates risk and opportunity. If you truly extend the horizon to 10 or 20 years, then EPS growth becomes the main driver of value. That is the mindset we operate with, knowing that multiples can shift but earnings power is what endures
19/02/2024 What is the 2024 outlook for subsidiaries?
We do not give forecasts. Our subsidiaries always aim to grow and improve profitability, but the broader economy is uncertain. Our goal remains to generate more cash flow and profit, and results will show over time.
19/02/2024 What is the 2024 outlook for subsidiaries?
We do not give forecasts. Our subsidiaries always aim to grow and improve profitability, but the broader economy is uncertain. Our goal remains to generate more cash flow and profit, and results will show over time.
19/02/2024 What EBITDA margin are you aiming for organically?
In 2006 we had 0% EBITDA. Now it is higher, and we aim to keep improving year by year. Each acquisition should raise the group average, so over time margins should continue to increase.
23/04/2024 Would you consider switching the five-year EPS doubling goal to a five-year free cash flow per share goal?
No. We understand the logic, but we think in terms of cash flow already. Profit can be distorted by accounting, and free cash flow, especially excluding acquisitions, reflects real money we can deploy. Over time, however, EPS should smooth out and serve as a reliable measure of performance.
We are careful not to optimize numbers artificially. Free cash flow can be manipulated in the short term, such as by selling invoices to improve quarterly figures, which we refuse to do. If free cash flow were to diverge meaningfully from earnings over time, that would be a serious red flag.
21/07/2024 How is Newbies performing and how are you supporting them?
They are doing very well, with major projects underway and many incoming customer inquiries. They are in a strong position and, while everyone needs support, they already have a capable team working closely with Patrick from our side. I am confident they will continue to perform strongly.
The key support we are providing relates to succession, as one of the entrepreneurs is leaving the company. We are making sure there is enough capacity and capability in place to capture the market opportunities ahead.
21/07/2024 Can the three underperforming companies reach breakeven, and how long will it take?
The housebuilding segment in Sweden is very weak, not just for us but for the entire industry. We are keeping our factories busy, but margins are poor and costs must be tightly controlled. We were not efficient enough this spring, and we are addressing that. A turnaround will depend on external factors such as interest rates, building material prices, and labor costs. Demand for housing is strong, with thousands of homes needed, so sooner or later the market must recover, but timing is uncertain.
At Marquis, which we discussed earlier, the essential requirement is a strong team that enjoys the work and is good at it. We now have that team in place. With time and support, they will show customers that they are building a new, more efficient company. I believe they will succeed, though it will take time. We should revisit their progress in the next Q&A.
21/07/2024 Do you see parallels between Techno’s situation and Bergman Bewing’s refocus on profit over revenue?
When we started 18 years ago, we could only acquire what we could afford, and those were not always the best quality companies. Over time, as we earned more and survived the ups and downs, we reached a stage where we could be more selective. That naturally answers the question: as our means improve, so does the quality of our acquisitions.
We have seen similar progress among mature serial acquirers in Sweden. For example, Jörgen Beck at Lagercrantz made a major shift around 2005 by letting go of high-revenue, low-margin business and focusing on earnings. For us, that is just common sense. We want to constantly improve, even if it is a slow process. Our subsidiaries often do unglamorous work, which makes rapid transformation difficult, but our financial targets remain firm: doubling EPS every five years. Each peak and each valley should be higher than the last, and though it is a long journey, we are still early in it.
21/07/2024 Are you still confident about doubling EPS every five years, given higher starting numbers?
We are very confident. The five-year horizon is designed to prevent short-term, poor decisions that could damage long-term value. We could boost results quickly by discounting sales or other short-term actions, but that would harm the future. The target is meant to balance ambition with sustainability, and we are determined to achieve it.
We could also acquire more companies to accelerate growth, but we only want to buy businesses we can integrate properly and at fair prices. This discipline is what supports long-term compounding. Our entire team is committed to the goal, and while words are cheap, our track record and approach give us conviction.
21/07/2024 Any concluding remarks going into Q3?
It will be a lot of work, and I look forward to it. I am very proud of our fantastic team. The future is ours to seize.
21/10/2024 What long-term incentive structures do you use for key people?
We have a cash bonus program tied to yearly earnings growth. If earnings exceed the average of the past three years, a small percentage of the increase is paid as a bonus. This applies to both group management and subsidiary CEOs, with each CEO measured on their own subsidiary. We have not had option programs for a few years, but we are asking the board to propose a new option program for subsidiary CEOs and group management at the 2025 Annual General Meeting.
21/10/2024 In which markets or companies do you see the best scalability over the next 5–10 years?
We see opportunities everywhere. Every company we acquire, we believe will perform well, otherwise we wouldn’t buy it. Some are expected to grow modestly, maybe GDP plus a couple of percent, which is fine because we reinvest that cash into new acquisitions. Others may grow 10–15% organically, which is very strong for us.
Our main strategy is to buy companies with a solid history of stable, low growth. Organic growth should be steady, but the real driver of returns is acquisitions. Subsidiaries generate cash, and we allocate it into new acquisitions, which builds both earnings and group resilience over time.
21/10/2024 What time frame do you work on, quarterly, yearly, or longer?
We work on all time frames, from the next hour to the next decade. We avoid optimizing for a single quarter or year, but the long term is made up of many short terms. Some companies need no short-term focus, while others require immediate action such as reducing costs or adjusting marketing. The time horizon depends on the task at hand.
21/10/2024 Should you acquire businesses less exposed to economic cycles, even if they cost more?
We are happy with how we value companies today. The question of cyclicality we already addressed, and we believe our approach works.
21/10/2024 How will Technion look in 10 years in terms of geographic diversification?
Sweden and the U.K. remain core, but we expect to enter other Scandinavian countries within that period. We have always explored other countries, though we had not found the right fit until recently. It will happen, but we cannot say when or where yet.
17/02/2025 What is the expected timeline for the company’s return to profitability?
It varies significantly across subsidiaries, and it would not be honest to provide a specific date. We are working as hard as we can and are already seeing improvements. I am confident we will get back on track, but timing will depend on individual circumstances.
While the exact timing is uncertain, our goal is to make improvements as quickly as possible. If during 2025 a company fails to progress in the right direction, it will not remain with us into 2026.
23/04/2025 Should investors think about EPS growth from 7.5 SEK in 2023 to 15 SEK by 2028?
Yes. That reflects our long-term goal. But instead of setting one static target for 2030 and then refreshing it, we maintain a continuous rolling five-year target. Every year, even every quarter, we extend the horizon by five years. That ensures we stay aligned with the long-term compounding of earnings per share.
21/07/2025 Have economic conditions in Sweden deteriorated since Q1, and what is your outlook?
Yes, conditions have deteriorated somewhat, particularly in heavy industry segments. Large global customers are hesitant and struggling with order intake, which flows down to us.
On the positive side, we see new orders in housing and construction, though the heavy industry environment remains more challenging.
21/07/2025 Have Swedish economic conditions deteriorated since Q1, and what is your outlook?
In some industries, yes. On a one- to two-year basis, the economy is down. But our companies are so small relative to the total market that it should not translate one-to-one into how we perform. If a CEO is only “running the mill,” then yes, it impacts them directly. But our philosophy is that when you are less than 1% of the market, you can work harder and smarter, take a little market share, and offset the downturn.
We have CEOs who embody this approach, and they do not even feel the deterioration, despite what the macro data say. They are simply pulling double the weight. That mentality is something we want to instill across the group.
21/07/2025 Four companies lost SEK 14 million in H1 2025, but you expect SEK 2–5 million contribution by year end. Can you explain?
The four companies referred to are shown in the middle of the whiteboard page, where you can see their monthly order backlog development.
21/07/2025 Why did four companies lose SEK 14 million in H1 2025, and how will they turn positive by year end?
These companies have high gross margins, which means they do not need much revenue to break even. With low volumes, they naturally lose money, but once volumes rise, profitability increases quickly. The frustration is the long lead time from closing a deal to producing, recording sales, and collecting cash flow.
Two of the companies, Hemet and Grimstorpe, are building-related and face delays from planning permits. We expect them to turn slightly positive in Q4, contributing SEK 2–5 million. That level is not their long-term potential, but based on backlog today, it is realistic. We expect much stronger numbers over time, and we are pushing to accelerate that recovery.
21/07/2025 What processes are in place to avoid acquiring or creating “Kakapo” companies?
The risk exists, but in the short term it is limited because we focus on niche leaders with growth histories. Every company will eventually hit a plateau where new skills are needed to climb higher. This has happened even to us at Technion, but we now have more tools to handle it. The higher risk is when bringing in outside hires without the full skill set or foresight. To avoid this, we must ensure companies keep practicing and preparing for future needs, not just present ones.
We have learned expensive lessons in this downturn. Two key improvements are: first, setting realistic but ambitious targets with clear steps, where we are more involved in strategy; and second, following forward-looking KPIs much closer. Momentum flows in both directions, so early detection and tighter monitoring prevent operational deterioration from persisting too long.
21/07/2025 Are Grimsthorpe, Hemet, and Marquis City part of the turnaround group on page nine?
The two building companies, Grimsthorpe and Hemet, are part of the turnaround group. Marquis City is not. It has no traditional backlog, so its reported backlog is always zero. Still, we are putting a lot of effort into the company. Year-to-date it has broken even, which is not where we want to be, but it is about SEK 4 million better than last year. The trend is positive, but from a low baseline.
21/07/2025 Is the SEK 69 million order backlog enough for these companies to be profitable in Q4?
Yes, as of today, they look set to make a small profit. We are not satisfied with that level, as they need to be far more profitable in the future. That is the goal for the CEOs and for us.
21/07/2025 Besides the four turnaround companies, are others losing money?
Yes, about one third of the group is still losing money. That was also noted in the Q1 and year-end reports. Importantly, the trend is moving in the right direction, and we expect to report a much healthier group going forward.
Risks & Macro
21/10/2022 Do we worry about key man risk if founders leave acquired companies?
For us the most important thing is to make it inspiring and fun to be part of the Technion group. From the first conversations with entrepreneurs, we openly discuss scenarios of success or failure and what happens afterward. Sellers usually commit to stay at least two years, often longer.
After that, we try to show them that they have a place in the group even after selling their shares. Most of the time, we succeed, and these individuals become valuable ambassadors for our culture. Their heart stays with us, even if their ownership ends.
13/02/2023 What is the impact of higher interest rates on profitability and EBIT margins?
I want to say yes, we can maintain EBIT margins, though it depends on how high rates go. In the last quarter, our interest costs were about $5,000,000 higher than the same quarter in 2021. Money is more expensive now, so we are even more cautious in how we allocate capital. When we started in 2006, rates were higher than in the past decade, so we know how to operate in that environment. We are cautious by nature, and that discipline helps.
We also maintain strict valuation discipline. When rates were low, we did not inflate multiples, and now that rates are higher, we do not lower them either. We stick to this approach because we invest over the very long term. We also look for companies resilient to different environments. Higher rates mean higher costs, that is reality, but we focus on businesses that can withstand such shifts.
13/02/2023 How recession-proof is Techneon?
It is difficult to say. Looking back at the past year in a tougher economy, we handled it quite well. Q4 slowed somewhat, but our diversified group helped balance challenges. Each company is exposed differently, so overall resilience depends on how deep a recession becomes.
For example, Hemet and Grimstad are tied to construction and housing, representing less than 10% of turnover historically. Hemet sold close to zero houses in recent quarters, which shows that exposure. But other businesses perform better in downturns. Techneon will never grow the fastest, but we aim to avoid falling apart by balancing cycles across our portfolio.
13/02/2023 How is the lending environment with banks lately?
Compared to 15 years ago when we started, banks are much more interested in us now. We have a strong dialogue, and that seems set to continue.
The language has shifted. Previously, banks encouraged more borrowing. Now they focus more on balance sheet strength and cash flow profiles. We are glad we have remained conservative and stuck to our principles, as that positions us well in today’s environment.
20/04/2023 How resilient is Technion given current macro conditions
Rsilience is built into our model through diversification across many industry niches. At any given time, some companies may struggle, such as those in Swedish house building, while others perform better, like those benefiting from electrification trends. Most sit in the middle, operating as usual. This broad mix makes us robust against economic fluctuations, as we saw during COVID. We believe it will help again during the current recession.
We are confident in our ability to act quickly, scale up or down, and focus on profit over sales. Internally, we even report earnings first and net sales second to emphasize profitability as our priority. This discipline, together with flexibility and speed, underpins our resilience in tougher times.
20/04/2023 What were the biggest positive and negative surprises of 2022?
The negative surprise was the Russian aggression against Ukraine, which remains terrible. The positive surprise was finding Carina, who joined us and has been a tremendous addition. That was a very good surprise in the summer.
06/05/2023 How do you think about interest rates, debt, and the macro environment in acquisitions?
We enjoy discussing macroeconomics, but we do not act on it because our track record at predicting macro events is poor. Instead, we build an all-weather portfolio of companies with uncorrelated risks, some in electrification, some in defense, some in housing. This way, the businesses themselves balance out cycles without us needing to guess where the economy is heading.
In financing acquisitions, we keep it simple. We typically use 50 percent cash and 50 percent bank debt. With higher rates, one might argue we should use more cash, and with lower rates, less. But we prefer to stick to 50/50, because it keeps us disciplined and avoids trying to be too clever. We also avoid chasing higher valuations during times of cheap money. Our principle remains: get our money back within five years. It is not optimized for every point in history, but it works well over the long term.
21/10/2023 Do you see risks with unionization of subsidiaries, and have there been any past issues?
If a subsidiary already has a union agreement, we respect it. If it does not, we leave it that way. In Sweden, there is a strong tradition of union involvement in companies, and it works well. Our approach is to maintain good relationships, which usually leads to constructive dialogue.
From my experience, unions can actually be an advantage. If you build trust, you have one counterpart to engage with rather than many, which helps in aligning on competitiveness and profitability. I see no risk in Sweden. Outside of Sweden, I have no experience, so I cannot comment.
21/10/2023 Order backlog has grown less than revenues. Do you see headwinds ahead?
Yes, I believe there are headwinds globally, but our order intake feels more normalized now compared to the unusual surge during COVID. Back then, customers placed oversized orders due to material and product shortages. Now, order sizes are stabilizing.
Some of our companies do not carry significant order backlogs, as they operate on a direct order-and-deliver model, which also affects the ratio.
21/10/2023 How is Shell impacted by the Middle East conflict, and has Stanwell been affected by cautious consumer spending?
Shey conservative market with long sales cycles, around two years. Adoption depends more on changing entrenched practices than on current events, so the conflict has not had a noticeable impact.
Stanwell has not been hit by consumer caution either. People still go out for a pint, regardless of the economy. The market has shifted somewhat in the UK, with changes in where people drink, pubs, restaurants, or stadiums, but the demand for beer remains steady. Stanwell runs like clockwork.
19/02/2024 Outside of homebuilders, do you have similarly cyclical holdings?
Not to the same degree. Some contract manufacturing factories are cyclical, but they are performing well. All our companies are exposed to broader economic cycles, and Sweden and Europe’s downturn has weighed on organic growth. Homebuilders, however, stand out as the most heavily impacted.
19/02/2024 Why include construction companies given their cyclical risks?
That was my decision. I love wooden houses and became close to one of the entrepreneurs, who now works with us. They are fantastic people and skilled operators, but construction is highly cyclical. We are not pursuing more in that sector, and our focus is on making the two we own more robust for the future.
19/02/2024 Outside of homebuilders, do you have similarly cyclical holdings?
Not to the same degree. Some contract manufacturing factories are cyclical, but they are performing well. All our companies are exposed to broader economic cycles, and Sweden and Europe’s downturn has weighed on organic growth. Homebuilders, however, stand out as the most heavily impacted.
19/02/2024 Why include construction companies given their cyclical risks?
That was my decision. I love wooden houses and became close to one of the entrepreneurs, who now works with us. They are fantastic people and skilled operators, but construction is highly cyclical. We are not pursuing more in that sector, and our focus is on making the two we own more robust for the future.
19/02/2024 Are some businesses less resilient or more cyclical than expected? What percentage are cyclical?
It is hard to quantify. Everything has some level of cyclicality, but most of our businesses are not very cyclical.
23/04/2024 What are the biggest lessons you learned in the past half year during macroeconomic struggles?
Tough times are when you really learn. It reminds us that business is not always sunshine. The most important thing is to take care of each other, motivate colleagues, and be role models. We try to stay positive, encourage our coworkers, and give them energy to keep going. It is vital not to sit still but to keep doing more: call more customers, visit more people, and push through difficulties.
Another key learning is that while we talk about the long term, it is really just many short terms strung together. When financial results are painful in the short term, the temptation is to trim numbers. But we would rather accept a bumpier road with higher long-term CAGR than a smoother, lower one. Looking back, the economy made us feel comfortable when maybe we should have acted earlier. Now we focus on actions that fix next year and five years ahead, not just this month’s results.
17/02/2025 Investors have expressed concern about a lack of transparency, noting no profit warning or clear signal of severity in the last Q&A. How will you rebuild trust?
The only way to rebuild trust is by showing results. Words alone are not enough at this stage. We are fully focused on execution and delivering proof through performance. I am confident we will demonstrate the improvements we have discussed.
23/04/2025 What are your plans regarding hedging and currency risk?
Over the long term, hedging is a cost. It smooths out quarters but does not generate profit over time. Our subsidiaries are free to decide their approach, and most choose floating exchange rates. Some CEOs prefer limited hedging to avoid volatility, but it comes at an insurance cost. At the group level, we do not plan to hedge.
23/04/2025 How much of your sales in the US are directly affected by tariffs?
The effect is minimal, in the low single digits, below 5% of total revenue. Unfortunately, our plans to expand in the US have been delayed due to uncertainty. The bigger issue is the broader global slowdown, where customers are postponing investment decisions. The limited US sales we do have are with companies that have strong pricing power, meaning customers absorb added costs.
21/07/2025 What are the learnings and current status of the Reward Catering transaction and lawsuit?
We acquired a company in Ireland and are in dispute with the sellers over an earn-out, which has become a court case. It has since been redirected to settlement under the share purchase agreement. Additional legal cases have emerged, which the court has asked to be handled in court rather than publicly. We respect that process and cannot share more until resolved.
This is not a normal situation for us, but we are confident the Irish courts will decide fairly. From our side, solicitors, auditors, and our certified adviser are all involved to ensure disclosures are handled correctly. We have seen commentary asking why we do not say more, but the reason is simply that we must follow the rules of the High Court of Ireland and Swedish regulations. We will share more when legally possible.
Personal Questions
21/10/2022 How did we find our new CFO Karina and why did we choose her?
We found Karina through the way we prefer to recruit, by recommendation from one of our partners. Several of us met her and enjoyed the interaction. She has a strong background that suits us well.
She has worked in large listed companies in Sweden and comes across as a warm and competent person. Her experience and personality fit perfectly into our group.
21/10/2022 Why have we changed CFOs so often, and why doesn’t Daniel continue?
Anil is a fantastic CFO but even stronger as the CXO, so it was our shared goal to bring Karina in as CFO. As for the frequent changes, sometimes life events intervene. Niklas had a family issue that required him to move abroad, which was sad for both sides. Susanna wanted to follow her dream of moving into the beauty business within our family company, so she left.
We are very happy we found Karina. We do not enjoy changing CFOs so often, but sometimes circumstances make it unavoidable. For clarity, my own role as CFO was always meant to be interim, so it was understood that we would eventually bring in someone else.
13/02/2023 Why not aggressively incentivize management like peers to reduce key man risk?
For us, attracting the best people is essential. We want to build the best teams and be the best company to work at. Monetary incentives are important, but so are many other factors. We do not compare ourselves much to peers; we prefer to follow our own path.
So far, we have been fortunate to attract excellent people, and I believe we are the best team. I trust that we will continue to succeed in drawing and retaining top talent in the future.
13/02/2023 Has Daniel stopped buying shares?
No, I have not. I only pause when regulations prevent me from doing so. Since Karina took over as CFO, I am no longer obliged to report my share purchases, which saves time and keeps things simple. I continue buying shares and will likely do so as long as I remain at Techneon. If I ever stop, I will let you know.
13/02/2023 Karina, how has your onboarding been, and do you like your colleagues?
I like them a lot. My onboarding began with the year-end closing and report, which meant I spent too much time at headquarters. In the coming weeks, I hope to meet more of the people behind the numbers. I already know the figures, but I want to connect with the teams across the company. And yes, I really like these guys.
20/04/2023 Are you still buying Technion stock personally?
I do not buy much stock myself, but others on the team do. Personally, I have bought at around 1.80, and I continue to buy regularly with my salary regardless of price. Our philosophy is long term, measured in five-year increments.
So yes, we remain solid long-term buyers, but not with any focus on short-term trading or quarterly outcomes.
20/04/2023 What do you expect to gain intellectually and culturally from attending the Berkshire Hathaway Annual Meeting?
Honestly, I most look forward to spending time with Daniel. We complement each other, and he has done a lot for Technion. He deserves to experience the meeting before it is no longer possible.
The trip will be inspirational and fun. Whenever we travel, we learn, whether through our own discussions or by meeting new people. I believe the Berkshire meeting will be another opportunity to grow and gain perspective together.
06/05/2023 How did you become responsible for acquisitions at Technium?
I am not sure how to get a job like this in general, but I can explain how I ended up here. I studied economics in Stockholm, not because I loved it but because I wanted to avoid becoming a doctor like my parents. I did not know much about finance until I discovered Warren Buffett, Charlie Munger, and Berkshire Hathaway, which inspired me. I thought their approach, long-term, people-focused, and culture-driven, was both sustainable and fun, and I wanted to be part of something like that.
To gain experience, I worked in management consulting, first at McKinsey, then at a small boutique firm, and later at a company. Over five years, I had three consulting jobs, which were enjoyable but lacked the long-term team feeling I wanted. Eventually, I joined a laundry company in Sweden called Textilia, working with its CEO, Frederick, for five years. I also considered becoming financially independent through investing, but as I learned, I realized I wanted to keep working. When Technium did its IPO in 2019, I followed the company closely. At first, I was skeptical, especially after its early profit warning, but over time I invested my own money and asked to meet with the CEO. After our first conversation, he invited me to join the team, even without a defined role. That was how I became part of Technium, responsible for acquisitions.
06/05/2023 How many Technium shares have you bought personally, and when?
I have bought 100 percent of my shares on the open market. I have no options and have never received any gifted shares. I started buying before I joined Technium in 2021, though at that time it was a small position, perhaps a fifth or a quarter of my current holdings. Since then, around 75 to 80 percent of my shares have been purchased. Most were acquired after I started at Technium, when the stock was still very lowly valued.
06/05/2023How many Technium shares do you personally own, and how were they acquired?
I own all my shares through open-market purchases. I have never had options or received gifted shares. Before I joined in 2021, I owned perhaps a fifth or a quarter of my current holdings, with the rest acquired afterward. Roughly 75 to 80 percent of my shares have been bought since I started at Technium, when the valuation was still low.
06/05/2023 How is Technium’s management compensation structured compared to Constellation Software?
I admire Constellation Software and know many of our shareholders also hold their stock. But our system is different. At Technium, all managers and CEOs receive a fixed salary plus profit sharing. Profit sharing is based on a percentage of the increase in profit compared to the average of the last three years. The higher profits rise, the more difficult it becomes to keep increasing, which creates a natural challenge.
We do not require managers to reinvest bonuses into shares. We keep things simple and allow people to decide for themselves. Many choose to buy shares, and we are glad when they do. But we also recognize that our managers are regular people, not financially independent investors. They use their earnings for everyday life, rent, food, family expenses. We want their ownership in Technium to come from genuine belief in the company, not obligation.
06/05/2023 How is insider ownership structured at Technium?
We are transparent about ownership. Our CEO, Johan, owns about five percent of the company, almost entirely from founding the business. Maria and Mona both bought shares before the IPO and hold meaningful stakes; some of those shares were added in the open market afterward. The great majority, however, comes from before the IPO.
As for institutional ownership, Danske Bank’s 6.8 percent stake comes from its mutual funds. Brokerage accounts complicate reporting, since shares can appear under Avanza, Nordnet, or other custodians unless the ultimate owner discloses holdings. That is why not all shares show up under individual names unless confirmed.
21/10/2023 Who owns the other 50% of Vixar AB besides Chairman Pär Berggren?
The other 50% is owned by Karl Johan Alström. Together, they have been the largest shareholders of Technion since the fall of 2008.
21/10/2023 Why are there no long-term incentives for management given dependence on the founders?
We incentivize subsidiary CEOs through monetary rewards tied to earnings growth, giving them a direct stake in improving results. That structure works well at the operating level
For top management, long-term incentive design is ultimately a board decision, not something we set ourselves. It is a topic that can be discussed in depth, but it sits with the board rather than management.
19/02/2024 Why have you sold so many shares? What is the background?
During the autumn we had discussions with the largest shareholders about a program to tie me closer to Technion. I see my future here and want to build this with Johan and the team. The process took longer than expected and then we entered a blackout period, which meant we could not act or communicate.
When the blackout ended with the quarterly report release, I understand the confusion it caused, but nothing has changed from our perspective. To underline my commitment, as announced minutes ago, I acquired 100,000 shares directly through Johan.
19/02/2024 What happened with the CFO change and what is the plan forward?
Karina decided to leave just before Christmas. She remains with us until her departure in a few weeks. She is a very good CFO, but she did not enjoy working with us.
We have hired two people who will start in April, one early and one later in the month, creating a strong finance team. We will not use the CFO title this time, since that role has carried bad luck here. Instead, we want great people who will grow with Technion and become part of the family.
19/02/2024 Why has Technion had five CFOs since 2019?
It is true we have had five since being listed, which is a lot. Two of them, Maria and Daniel, are still with us. Maria has been here since 2009 and Daniel since 2021.
For the three who left, the reasons were different in each case. If you put them in a room together, there would not be a single reason. In my reality, it is three completely separate situations.
19/02/2024 Did you sell shares, and why?
Yes, I did. During autumn we discussed programs to strengthen my tie to Technion, including an option program offered by larger shareholders directly to me. This would create no dilution or cost for other shareholders. Those options needed to be paid for, and I felt it made sense to use my own money to increase my stake.
Then the blackout period happened, which made the timing far from ideal from a communications standpoint. Sometimes it unfortunately works out that way.
19/02/2024 Why don’t CXOs disclose share transactions?
Currently, regulations require only the CEO and CFO to disclose trades. I think this should change. It would be better if the entire Technion management team was included so shareholders could see all of our transactions. That change may come very soon, possibly within days.
19/02/2024 Why have you sold so many shares? What is the background?
During the autumn we had discussions with the largest shareholders about a program to tie me closer to Technion. I see my future here and want to build this with Johan and the team. The process took longer than expected and then we entered a blackout period, which meant we could not act or communicate.
When the blackout ended with the quarterly report release, I understand the confusion it caused, but nothing has changed from our perspective. To underline my commitment, as announced minutes ago, I acquired 100,000 shares directly through Johan.
19/02/2024 What happened with the CFO change and what is the plan forward?
Karina decided to leave just before Christmas. She remains with us until her departure in a few weeks. She is a very good CFO, but she did not enjoy working with us.
We have hired two people who will start in April, one early and one later in the month, creating a strong finance team. We will not use the CFO title this time, since that role has carried bad luck here. Instead, we want great people who will grow with Technion and become part of the family.
19/02/2024 Why has Technion had five CFOs since 2019?
It is true we have had five since being listed, which is a lot. Two of them, Maria and Daniel, are still with us. Maria has been here since 2009 and Daniel since 2021.
For the three who left, the reasons were different in each case. If you put them in a room together, there would not be a single reason. In my reality, it is three completely separate situations.
19/02/2024 Did you sell shares, and why?
Yes, I did. During autumn we discussed programs to strengthen my tie to Technion, including an option program offered by larger shareholders directly to me. This would create no dilution or cost for other shareholders. Those options needed to be paid for, and I felt it made sense to use my own money to increase my stake.
Then the blackout period happened, which made the timing far from ideal from a communications standpoint. Sometimes it unfortunately works out that way.
19/02/2024 Why don’t CXOs disclose share transactions?
Currently, regulations require only the CEO and CFO to disclose trades. I think this should change. It would be better if the entire Technion management team was included so shareholders could see all of our transactions. That change may come very soon, possibly within days.
19/02/2024 Would you consider a Constellation Software-style bonus structure tied to stock purchases?
I would love to implement something like that. If I controlled all the votes, I would ensure we had a system where bonuses were partly reinvested into company stock with a lock-up.
19/02/2024 If you had to track one KPI for the next 20 years, what would it be?
Free cash flow per share, net of acquisitions, over the long term.
23/04/2024 Can you introduce the proposed new board members?
Chris Mayer is a major shareholder through Woodloch House and has been investing for a very long time. Having him on the Board will bring great insight and also make us conduct meetings in English, which will be good for our discipline. I look forward to exchanging ideas with him.
Liana Amfeldt previously worked with AQT as their company lawyer. She is very familiar with regulations for listed companies and acquisition processes, bringing deep experience in those areas. Boel Castan is a manager with long experience in digitalization and IT companies, areas where we are less experienced. Her expertise will be very helpful in strengthening our path forward.
23/04/2024 Is there symbolism behind the frequent use of the number 8 in communications?
It started as a fun thing back in university and stayed with me. It has no secret meaning, but it is important to keep fun elements in life.
We like to have fun in our work, and little traditions like that add to the enjoyment.
23/04/2024 Why has Technion changed CFOs often?
There is no single reason. We have had three different CFOs, all of them very good people. Each left for different reasons, and we have explained this many times.
There are no secrets behind it. It was simply not the right fit for them at the time. Perhaps I am also tough to work with, which may have played a part.
21/07/2024 What percentage of your net worth is in Techno shares?
I (Johan) own essentially everything in Techno, apart from partial ownership of my apartment and country house. My wealth is almost entirely in the company.
I (Daniel) have about 80% of my net worth in Techno. In other words, we are fully aligned with shareholders and very confident in the future.
21/10/2024 How do you manage future CEO succession risk?
We try to avoid solving that problem too early. Many of the leaders of recently acquired companies are in their 50s and want to stay for another 5–10 years or more. Others already have a “crown prince or princess” in place, often in their 30s, who could lead for decades if treated right. That is our preferred way to handle succession.
17/02/2025 Why are not all managers listed as PDMRs (persons discharging managerial responsibilities)?
Our interpretation of the regulations is that only individuals able to influence long-term strategic decisions should be PDMRs. At Technion, we currently have three: myself, Daniel, and since Christmas, Jonathan Alexandersson. As CEO, I hold executive authority. Daniel acts in my place when needed, and Jonathan, as part of the acquisition team, has veto power on acquisitions, making him a PDMR.
We are a nine-person office, but not all have authority over strategic decisions. This approach follows Swedish financial regulations, and we will clarify this more explicitly in our reports and on our website.
17/02/2025 Who from the acquisition team is based in the UK?
None of us are based in the UK. However, Johan, myself, and even Patrick, though he is not on the acquisition team, spend time there roughly every second week. That frequency is likely to increase as the UK is a key focus region.
17/02/2025 Were underperforming subsidiary CEOs always below standard, or was this only revealed during the downturn?
Economic headwinds reveal which personalities and leaders are suited to tough environments. It becomes easier to see poor performance or lack of the right personality when times are difficult. The new CEOs we have brought in have replaced leaders who were not in place when we acquired those companies.
17/02/2025 Do Johan and Daniel plan to buy more Technion shares to increase skin in the game?
We would love to, and the intention is there, but it is difficult to comment further at this stage.
23/04/2025 Can you share more about Jonathan, your CCO with veto rights on acquisitions?
Jonathan is from western Sweden, trained as an economist, and worked seven years as an auditor with PwC. He is very engaged in investing and finance, and now oversees much of the financial side at Techno. He is part of the three-member investment committee alongside us, and acquisitions require all three votes. Jonathan focuses especially on accounting and financial due diligence, complementing our broader evaluations.
23/04/2025 What is the origin of the name Technion?
There is no dramatic story. We played with words combining “technology” and “unification,” and found an available web domain. That evolved into Technion, spelled with a Q.
28/08/2025 How has running Teqnion for nearly 20 years been?
I think it was 19. We founded it in the fall of 2006. The idea came from my friend’s parents, who encouraged us to start. Those discussions began in spring 2006. We persuaded the first two subsidiaries to exchange their shares for Teqnion shares, making them the first group companies fully owned when we founded it.
It took time to convince the elderly gentlemen that Jonas and I were capable. After discussions, they agreed, and by October or November 2006, we finalized everything. From there, we started building something, or at least attempted to.
28/08/2025 What surprised you most about building Teqnion?
Initially, it was realizing the importance of leading by example. You can get far more from coworkers and staff if you motivate them correctly. They see that life is more enjoyable if they excel at their work. Coworkers and managers notice this and encourage you to do more, making work quality time. Treating coworkers well and encouraging improvement yields great results.
It was gratifying to see that such a simple truth works. I was very operational for the first 15 years because we never raised capital until our 2019 listing. We grew solely with free cash flow, waiting until we had money to buy another subsidiary. That period gave me deep knowledge of new companies, their models, and how to make small industrial technology-driven companies profitable. This slow learning process was very educational and still helps me. Entrepreneurs realize I’ve experienced what they have, which builds trust when discussing selling their life’s work.
28/08/2025 How did Daniel join Teqnion?
We were looking for a new CFO when I got a cryptic text from him. I asked for an email, and he sent a thoughtful letter describing himself and how he found Teqnion. I called him, and we spoke for three hours about life and business. By the end, I said, “You should work with us.” He agreed.
28/08/2025 So he was not hired as CFO?
Correct. He knew we were searching for a CFO, but I told him he would do other things. He began looking into acquisitions and working with me on outreach. After a month, he suggested we split efforts to double coverage. Internally, I felt a sting, since it took me 15 years to learn what he grasped in one month. But he soon came back saying it worked better when we collaborated, which warmed my heart. Since then, we’ve worked together on nearly every decision. He was made deputy CEO last spring.
28/08/2025 Why has Teqnion struggled to hire or retain a CFO?
There is no secret. Our first listed-company CFO was very competent and fit our culture, but moved south for family reasons. The next person did a good job but left to run her father’s company. A third was highly skilled but not a cultural fit, despite our efforts. She left because we do things differently and she preferred conventional methods.
Now we have Jonathan, who joined a little over a year ago. He fits very well, enjoys working with us, and is a big part of strategy and operations. I hope I do not jinx it, but so far it has worked out great.
28/08/2025 What do you enjoy most about your work?
I enjoy the constant learning. After 19 years, it still feels like the beginning. Now it feels like we will grow big, which is exciting and motivating.
28/08/2025 Do you see yourself doing this another 19 years?
I hope so. When Jonas and I began, we thought three to five years. Now I want to do this for as long as I can contribute. Work is meaningful to me; creating something beats the fantasy of long vacations. As long as I am effective, I want to continue.
Other
21/10/2022 Why do meetings always start at 8 past the hour?
It is a silly tradition from the student carnival in Stockholm, which departs every third year from the Royal Institute of Technology at 14:08. Johan was once head of that event, and the habit stuck.
21/10/2022 How can long-term shareholders help Technion?
Just having these Q&As is helpful because it makes us think about how we act, how we answer, and what should be top of mind. Engaged shareholders who challenge us in this way are already adding value.
21/10/2022 As a shareholder, what do I need to know about Technion?
The first rule about Technion is you never talk about Technion. But seriously, the important thing to know is that we are only at the beginning.
20/04/2023 Will you implement audit, remuneration, and nomination committees?
We already have a nomination committee since our listing. Going forward, we will also establish an audit committee and a remuneration committee. In fact, today’s Annual General Meeting serves as a kickoff for that process.
20/04/2023 Are you considering moving to the main list exchange?
Yes, we see it as a natural step and it has been a constant discussion since we listed. We intend to move to the main list in the future, but there is no timeline set. When the time comes, we will inform the market.
06/05/2023 How do stock options work at Technium, and what dilution should investors expect?
Under IFRS, options are not expensed through the income statement but show up as dilution in earnings per share. As of May this year, about 150,000 options will expire, leading to close to one percent dilution. After that, around 45,000 more options are outstanding through 2024–2025, representing about a quarter of a percent dilution. This year’s AGM has decided against issuing new option programs, so there will be no additional dilution for now.
Most options historically have not been popular, since they were priced at market using a three-year Black–Scholes model. Few managers exercised them. That is why we stopped issuing new programs, though we continue to consider whether longer-term options might create better alignment.
06/05/2023 Do you have any concluding remarks for investors?
I have only been at Technium for two and a half years, but it feels like day one every day. We are just getting started and hope to do this for a very long time. If you want to learn more, you can watch our Q&A sessions on YouTube, where we answer shareholder questions, or follow me on Twitter. Our contact details are also available on our website, and we are always open to conversations.
For us, investing is like flying: long stretches of routine punctuated by critical moments. Ninety-nine percent of the time it is boring, but what you do in the one percent makes all the difference.
21/10/2023 Why are reports not translated into English?
We are a very small head office team, only seven people, and producing reports in multiple languages would mean doing double work. Since we are headquartered in Sweden, we are legally required to produce reports in Swedish anyway. With translation tools like Google Translate available, anyone can convert our PDF reports into their own language with good accuracy. For us, it makes more sense to spend resources on running the business.
21/10/2023 What do investors underappreciate about your business, and what are you doing differently from competitors?
That is hard to say. We do not spend time analyzing competitors. Our focus is simply to improve a little every day. With 26 subsidiaries, each runs its business independently, aiming to be the best in its niche.
What sets us apart is staying close to our subsidiaries, supporting them, and helping shape long-term strategies so they remain relevant in ten years or more. Whether competitors do the same, we cannot say. We just know this approach works for us.
23/04/2024 Will the results of the AGM be published later today?
Yes. It is regulated that way. As soon as the results are written down, we will issue a press release.
23/04/2024 Where can we buy Technion merchandise?
We sometimes get questions about merch, which makes us happy. We even brought a few hats to the AGM. Mailing items takes time, but one idea is to set up a print-on-demand shop at some point. No promises, but perhaps in the future.
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Sources
Teqnion Raises Capital w/ Daniel Zhang
Earnings Calls