Redeye 2025 Serial Acquirers Conference - Day 1 notes

Disclaimer: Unless noted otherwise, views and analysis expressed here are the author's own and based on public sources. The article is intended for informational and entertainment purposes only. This is not financial advice. Please consult a professional for investment decisions.

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It may be snowing outside our hotel in Stockholm, but the serial acquirer industry is red-hot! Röko went public last week at a $3B valuation (our take here). Last week, I learned about a Norwegian software HoldCo called Hawk Infinity which grew EBITDA from $4M to $60M+ in the space of 5 years (stay tuned for a deep dive). There are at least 3 more Swedish serial acquirers planning to go public next year.  

Wait, how do I know all this? 

Because we are in Sweden this week for a reason: as guests of Redeye’s Serial Acquirer Conference. Yesterday, we attended 12 company presentations and below are our top 3 picks instead. The shorthand format reflects the conference's intensity!

Check out the video highlights here.

Next Generation Technology Group (NGTG): Japanese succession play with “99% leverage at 1%”

• What is it? A serial acquirer of Japanese manufacturing companies. Established in 2018, 10 acquisitions to date, c.$80M revenue with c.20% margin (2024 financials). More information here

• Eiichi (CEO) has background in mezzanine financing (Mizuho), followed by private equity 

• Playbook? NGTG looks for profitable (10%+ EBITDA margin) companies that have JPY 200M+ ($1.3M+) absolute EBITDA 

• Screen 400 targets / year, submit 10-20 LOIs, 3-4 deals closed

• Acquire for 2-4x EBITDA with 85-99% leverage. 1% fixed rate with a 10 year term. Target 3-4x all-in leverage

• Investment case tailwinds:

  • Ageing society, lack of succession - but also negative perception of PE buyers

  • 120,000 profitable manufacturing companies in Japan

  • Attractive financing available - local (especially rural) banks keen to deploy excess liquidity 

• USP? Business owners are very shy and don’t like PE. Also, have very limited sale options: neither PE, nor competitions, which makes NGTG the preferred buyer

• Use network of former business owners for sourcing

• Not a hands-on owner. In the first 6 months visit the acquired company 2-3 times / week to unlock easy wins, like cost cutting and better hiring. Raise EBITDA margin by 2-3%. After 6 months decrease number of visits to 1-2 times / month

• Results so far? Shares have tripled since the February 2025 IPO. Eiichi still owns 65%. Have c.$50M of cash on the balance sheet (incl. IPO proceeds). Eiichi did not rule out further raises, but is keen to minimise dilution

• What happens to NGTG’s business model when interest rates go up? This is already happening - interest rates going up to 1.5-1.7%. Eiichi does not think Japanese rates will exceed 2-3% given low inflation & low GDP growth rates   

Hasko Invest: a mini Röko (0 -> $90M sales in 4 years) & 2026 IPO ambitions

• What is it? A Sweden based acquirer of leading niche product companies. Hasko’s portfolio includes Norscand, a supplier of spare parts for vintage mopeds; SMB Städgross, a producer of cleaning and hygiene solutions; and Sport Design Sweden, which produces sports merchandise for tourist destinations and sports clubs

• Playbook? 70% acquired upfront and the remaining 30% over 3-5 years. Specifically: this % is reinvested into the BidCo (not the ParentCo), with a put / call option exercisable over 3-5 years 

• Portfolio company EBITA margins vary from mid-teens to 40%. Long-term median organic growth of 15%. How come this high? Proprietary products, diversified exposure (40% of sales ex Nordics). Monitoring performance: Hasko is building a business intelligence system that integrates directly with the portfolio companies’ ERPs

• How does Hasko maintain quality in an outsourced production model and given the growing risks to extended supply chains? Portfolio companies must have trusted suppliers they have worked with for years

• 6 people in the central team, they plan to add 1 more to take care of reporting to conform with public company standards  

• Results so far. 2024 financials: SEK 915M in sales with 19% EBITA margin (pre-central costs). EBITA ex HQ costs grew from SEK 36M in 2022 to SEK 185M in 2024. 11 acquisitions in 3 years (9 / 11 proprietary leads) structured across 8 platforms. 1 divestment. 3x levered (incl. portfolio company debt)

• Hasko’s very first acquisition was a blip. The criteria weren't strict enough. Tried to help the business - took too much time - decided to divest

• 2024 metrics: 10% organic sales growth, EBITA 19%, 16% ROCE (this number should increase over time), 85% cash conversion, capex/sales 0.4% (product companies with outsourced manufacturing), 152% EBITA/NWC

• SEK 645M equity raised to date + another SEK 300M attracted in a recent, oversubscribed raise (8-9x EBITDA valuation). Targeting IPO in late 2026. What multiple? Investment banks are telling them 15x+

Note: approximate exchange rate 10 SEK : 1 USD

Cicor Group: a rollup play on Europe’s rearmament 

• What is it? A Swiss-based (and listed) serial acquirer of Electronic Manufacturing Services (EMS) businesses. 

• 3 verticals: healthcare, industrials and aerospace / defence - highest margins verticals. Aerospace / defence (A&D) is the fastest-growing market. Supplier of design and manufacturing service to A&D integrators in Europe

• Playbook. Why pursue an M&A-centric growth strategy? The EMS market has tremendous potential: €25B TAM growing by 7% CAGR. At the same time, it is highly fragmented: 1700 EMS companies in Europe. Cicor is No.10 by market share. Sticky customer relationships can be transferred to the buyer intact and translate into sustainably high profit margins. 

• Several levers to extract synergies: 

  • Economies of scale from electronic component purchasing

  • Payment terms. EMS is a low capex industry (capex 2-3% of revenue), however, net working capital management is paramount. Small businesses pay suppliers within 30-40 days. Whereas Cicor is on 90-120 days 

• Results so far. 2024 financials: CHF 481M revenue, CHF 58M EBITDA & CHF 62M free cash flow. Since 2020, revenues are up >2x and EBITDA >3x. Medium term targets are CHF 1B in revenue and CHF 100-130M in EBITDA. Having said that, organic sales growth in 2024 was negative

• M&A track record:

  • “Modest multiples” for targets with 20-80M sales: 5-6x EBITDA. Stay away from auctions

  • 40% of revenue comes from the acquisitions completed in the last 3 years

  • Strong post-closing performance: +15% revenue & +42% EBITDA (LTM pre-acquisition vs. 2024A) on average across the portfolio 

• Bottom line: 2024 ROIC c.15%, above cost of capital. On an upward trend in recent years. 

Note: approximate exchange rate 1 CHF : 1.14 USD

Day 2 notes here.