Acquisitions are a natural component of Novedo’s growth strategy and the Group has maintained a high acquisition rate since the first company acquisition was completed in January 2021.
Novedo acquires companies in three business segments: Industry, Infrastructure, and Installation & Services. The goal is for the three business segments to be equivalent in terms of sales over time.
Novedo’s subsidiaries currently operate in Sweden, Denmark and Estonia. Novedo sees good growth opportunities in its existing geographic markets but also has an active acquisition agenda outside its existing markets. For instance, Germany is a chosen market due to its long tradition of successful small and medium-sized companies.
Novedo sets high standards for the companies it acquires and has clear acquisition criteria. Management at acquired companies also needs to be entrepreneurial and willing to continue their work even after the company’s acquisition by Novedo.
Novedo acquires companies based on the following criteria:
- Healthy corporate culture.
- Strong entrepreneurs.
- Proven and sustainable business model.
- Leading position in its market niche.
- Trust-building customer relationships.
- Strong cash flows.
- >10 percent EBITA margin.
Novedo’s acquisition process has three key phases: when a potential company is identified, when it is evaluated, and finally when Novedo and the company being sold create a common understanding about how it will be run and developed moving forward and the parties come to an agreement on the commercial terms.