Accelerator for mergers and acquisitions

BUYOUTS

Accelerator for
mergers and acquisition

Text Risto Pennanen    Photo Susa Junnola

Successful mergers and acquisitions bring growth to companies and to the national economy. Finnish Industry Investment brings capital, know-how and networks to interesting projects.

Successful mergers and acquisitions bring growth to companies and to the national economy. Finnish Industry Investment brings capital, know-how and networks to interesting projects.

While capital is Finnish Industry Investment’s essential input in accelerating company’s growth, the State-owned equity investor also brings other added value to mergers and acquisitions.

“We have a lot of experience in mergers and acquisitions, so we can advise management in the planning and execution of a deal. This is especially important if management doesn’t have the relevant experience,” says Investment Director Juuso Puolanne from Finnish Industry Investment.

What’s more, the Finnish Industry Investment’s name is a reference for foreign investors and can open doors when a company is seeking international financing. Many international investors value the fact that the company also has a domestic investor partner.

And for companies, an international owner can bring new networks and industry knowledge, among other things. Getting international investors interested in Finnish companies is, in fact, one of Finnish Industry Investment’s key missions.

Growth and employment

Promoting business growth and internationalisation are important goals for Finnish Industry Investment and it prefers to be an investor in developing a company rather than being involved in transactions where one owner is replaced by another. Mergers and acquisitions are one way to achieve these goals.

“It’s a faster path than organic growth. In some cases, it can be virtually impossible to enter new markets without acquiring a business,” Puolanne notes.

There are also risks associated with acquisitions, but building a distribution network, customer contacts and other presence abroad is slow, expensive, and thus also risky.

Ideally, an acquisition will also generate new opportunities that can be even more important than the growth brought by the actual acquisition. For example, Valmet Automotive gained important contacts  with Daimler through the acquisition of a German manufacturer of convertible roof systems. Those contacts helped to create a foundation for bringing Mercedes-Benz A-Class production to Uusikaupunki.

Moreover, mergers and acquisitions can often contribute to the realisation of societal goals of job preservation and job creation.

More ambition

Studies indicate that Finnish entrepreneurs, on average, take a more cautious approach to growth than international competitors, whose know-how and products may not be as sophisticated, but they have more funding and a stronger will to grow. Finnish Industry Investment encourages entrepreneurs to be open-minded.

“We try to encourage entrepreneurs to make growth plans that could significantly increase market shares,” says Puolanne.

This doesn’t mean Finnish Industry Investment is involved in building only international growth. Boosting competitiveness is important also domestically. For example, Stella, a provider of homecare and household services, became a national player towards the end of 2014 by acquiring Esperi Care Oy’s response alarm and homecare services. Through the transaction, Stella gained the know-how that Esperi Care had developed over decades.

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What does Finnish Industry Investment assess when making an investment

  • Business plan
  • Growth opportunities
  • Market outlook in the sector
  • Management team
  • Product or service innovativeness