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Share 2016-09-23 17:29 RATOS B 40.16 SEK

Acquisition process

There is actually no typical acquisition process with a straight line from start to finish. Sometimes acquisitions are implemented within a few months, while others take considerably longer. Ratos may have been in contact with the company for several years before an acquisition takes place.

Ratos is always looking for attractive companies in which to invest. Ideas for potential acquisitions stem from several sources. Sometimes they come directly from other owners and entrepreneurs who are looking for a partner to realise their visions. Other times suggestions come from banks and our industrial contacts, but most of the ideas are self-generated. They originate in our own inquisitiveness and a genuine interest in entrepreneurship and Nordic business. Over the course of one year, Ratos analyses between 200 and 250 companies, and systematically maps sectors and regions. We always have several companies under observation, sometimes for a long time.

No one acquisition is like another. Only a few of the companies we look at lead to an investment, because the others do not meet our investment criteria and return target or because they are not for sale at that time. The timing must be right, but purchase price expectations and other conditions must also be fulfilled. Moreover, the parties involved must b  compatible. It is vital to have a clear plan for realising the return target and value creation early in the process. Another important aspect involves the mapping of sustainability-related risks and opportunities, including the operations’ long-term sustainability and the company’s level of maturity and values. The analysis provides a base for the business plan that is formed to drive sustainability efforts in the companies during Ratos’s period of ownership. Ratos also has exclusion criteria and does not invest in companies that deal in the arms industry or pornography.

Competition in the acquisitions market is fierce. Access to capital, from creditors and investors alike, triggers a rise in investment prices for good companies. It is important to find the optimum capital structure and leverage that allows profitable growth. For a long time, Ratos has adopted a long-term and responsible approach in the Nordic market and has a good reputation. We have good access to bank financing at reasonable levels and terms.