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Share 2018-11-20 17:29 RATOS B 23.30 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. We have chosen to focus our acquisition effort on six sectors. The division into these sectors governs our work internally and using this approach, we build knowledge and networks in each sector. This work provides us with a good view of what sectors and niches we want to invest in moving forward. We also work with industrial advisors with in-depth sector expertise, who actively support our acquisition work by evaluating the investment theme and specific acquisition opportunities.

Acquisition ideas sometimes come directly from other owners and entrepreneurs who are looking for a partner to realise their visions. Contact is established with the owners and management of attractive companies and we often track these companies for several years, even in cases where the companies are not ready for a new partner/owner. Over the course of one year, Ratos analyses about 200 investment candidates.

No two acquisitions are alike and only a few lead to an investment. It is important that the company meets Ratos’s investment criteria and return target, and that there is clear potential to realise. Other important conditions are mutual price expectations, timing and common values. It is vital to have a clear view early in the process of the company’s business plan, how value creation occurs and how the return target can be realised. Another important aspect involves mapping sustainability-related risks and opportunities, including the long-term sustainability of the company and the sector. The analysis provides a base for the business plan that is formed to drive sustainability efforts in the companies under Ratos’s ownership. Ratos also has exclusion criteria and does not invest in companies that operate 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 company-specific 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 terms.